In order to maintain a modicum of ties to Canada Justin Bieberdeveloped a product called “Blend it like Bieber” a maple and honeyblend designed to compete with table syrups, honey, and otherhoney-like natural sweeteners.

The honey is sourced from a private Bee Farm on the outskirts ofMedicine Hat, Alberta from 4th generation bee farmers. The maplesyrup comes from a maple syrup production plant in Val-d’Or in theprovince of Quebec.

Last year was the first year for Blend it like Bieber and hadsales of $5,799,000. BILB only sells wholesale and only has twosizes. A price of $3.25 for their 150mL bottle and $6.75 for their475mL bottle. Sales were nearly even with the 475 mL bottle selling812,700 units only 3,000 more units than the small bottle. A pricechange is planned and it is estimated that unit sales willrise.

A. Create a sales budget with the projected units andsales prices for next year.

Use your projected unit sales to create a production budget toanswer the question below.

Beginning Inventory Ending Inventory

150mL bottle 120,400 units ???,??? units

475mL bottle 89,200 units ???,??? units

Blend it like Bieber Inc. wants ending inventory to be 25% ofsales for the smaller bottles and 15% for the larger bottles

B. Create a production budget for both size bottlesbased on all the above information.

The “blend” can be broken down into three parts:

Maple: 40%, Honey 10%, Other Additives 50%.

The cost for the parts is as follows

Maple Syrup = $10 / liter

Honey = $17 / liter

Additives = $4 / liter

Liter = 1000 mL

C. Create a Direct Materials Purchases Budget for bothsize bottles based on all the above information.

D. What is the projected Gross Margin (Sales – COGS) fornext year?