Question

Coca-Cola recently redesigned its bottle to reduce its use of glass, thus lowering its bottle’s weight and CO2 emissions. Which budgets in the company’s master budget will this redesign impact?

Short answer

Redesigning the bottles will affectthe direct material budgetof the master budget.

Step-by-step solution

Meaning of Budget

A budget is a statement, or a document prepared based on estimated revenue and expenses to help the business to achieve its goals.

Explaining the company’s master budget that will impact due to redesigning

Coca-Cola Company changed their bottle to utilize less glass, resulting in a lighter container. This redesign will influence the budget for direct materials.

1. The direct material budget specifies the material to be acquired to meet the production goal. It can be shown in the budget monthly, quarterly, or annual.

2. The weight and CO2 emissions of the bottle have been lowered due to the redesign. As a result, the amount of material utilized per unit bottle must have decreased. The material required for the creation of bottles has changed.

Hence,redesigning the bottles will affect the direct material budget of the master budget