QUESTION TWO

A soft$-$drinks manufacturing company offering two $(2)$ soft$-$drink produe pes.

an orange$-$flavoured soft$-$drink $($Orange$)$ and a traditional cola soft$-$drnk $[$ola$).$

The company offers soft$-$drinks in three packaging variations: a $330$ millilitres $($ml$)$

candola, a $450$ ml plastic$-$bottle and a $1,25$ litres glass$-$bottle,.

$1.$ THE SOFT$-$DRINKS MANUFACTURING

The manufacturing process involves adding sugar, sodium and colourants

$($primary ingredients$)$ to the prepared water. The company buys the prepared

water exclusively from Hubbly at R$1,00$ per litre

A maximum of $2400000$ litres of prepared water is made available by Hubbly

during each financial year.

At the beginning of the manufacturing process, $5\%$ of the prepared water put

into the process is lost due to normal spillage

that is not lost yields one $(1)$ litre of soft$-$drink

PROCESS AND CAPACITY

Each litre of the prepared water

FINE

C

$+$

NEGC$)$

LENT

lo

ano

Due to the different packaging variations, SM resolved to set the stan

manufacturing costs based on the requirements of a one $(1\_$ litre soft$-$drink

Details

Orange

R$1,44$

R$0,64$

R$0,80$

R$1,20$

R$2,00$

Cola

R$2,40$

RO$,80$

RO$,60$

R$1,20$

R$2,00$

Standard costs per litre

Sugar @ R$12,00$ per kg

Sodium @ R$8,00$ per kg

Colourant

Direct labour

Variable manufacturing overheads

$2\mathrm{.}3.$ OTHER MANUFA CTURING COSTS $($not included above$)$

Custom$-$made empty containers. The standard costs of these empty o

for both product types are as follows: a $330$ ml candola is R$0,55$; a $450$

plastic$-$bottle is R$0,80$; and a $1,25$ litre glass$-$bottle is R$2,00.$

ainers

BUDGETED PRODUCTION

Orange units

Cola units

Candola Plastic bottle Glass bottle Candola Pflastic Bottle Glass Bottle

$000$ OSt

$320000$

$2500045000100000$

$12200$

REQUIRED

a$)$ Comment on whether the available prepared water would have been

sufficient to fully meet the $2019$ financial year manufacturing budget for all

units of both product types.

Calculate the variable manufacturing cost per unit for the plastic bottle

product variation for both Orange and Cola following the format below:

Plastic Bottle

Cola Plastic Bott

b$)$

$25$

Orange

Prepared water

XXX

XXX