Question

Direct Materials Purchases Budget

Lorenzo’s Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for September:

	Units
	12" Pizza		16" Pizza
Budgeted production volume	15,600		22,400

Three direct materials are used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

		12" Pizza		16" Pizza
Direct materials:
	Dough	0.80	lb. per unit	1.50	lb. per unit
	Tomato	0.50		0.70
	Cheese	0.70		1.30

In addition, Lorenzo’s has determined the following information about each material:

	Dough		Tomato		Cheese
Estimated inventory, September 1	650	lb.	180	lb.	350	lb.
Desired inventory, September 30	680	lb.	170	lb.	380	lb.
Price per pound	$1.30		$2.20		$3.20

Prepare September's direct materials purchases budget for Lorenzo’s Frozen Pizza Inc. When required, enter unit prices to the nearest cent.

Lorenzo’s Frozen Pizza Inc.
Direct Materials Purchases Budget
For the Month Ending September 30
	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza
16" pizza
Total pounds required
Total units to be purchased
Unit price	x $	x $	x $
Total direct materials to be purchased	$	$	$	$

Answer 1

Prepare September's direct materials purchases budget for Lorenzo's Frozen Pizza Inc. When required, enter unit prices to the nearest cent. Lorenzo's Frozen Pizza Inc. Direct Materials Purchases Budget For the Month Ending September 30 Total Dough Tomato Cheese Units required for production: 12" pizza 16" pizza Plus desired inventory, September 30 Total pounds required Less estimated inventory, September 1 Total units to be purchased Unit price Total direct materials to be purchased 12,480 7,800 10,920 33,600 15,680 29,120 680 170 380 46,760 23,650 40,420 180 650 350 46,110 23,470 40,070 $3.20 $1.30 $2.20 $59,943 $51,634 $128,224 $239,801 Explanation: Dough Tomato Cheese Units required for production: 12" pizza 16" pizza (15,600 x 0.70) 10,920 (22,400 x 1.30) 29,120 (15,600 x 0.80) (22,400 x 1.50) (15,600 x 0.50) 7,800 (22,400* 0.70) 15,680 12,480 33,600