Question

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	12,700		26,600

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	600	lb.	200	lb.	290	lb.
Desired inventory, September 30	630	lb.	190	lb.	320	lb.
Price per pound	$1.20		$2.30		$3.00

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

SOLUTION

Direct Materials Purchases Budget

	Dough	Tomato	Cheese	Total
Units required for production
12" Pizza (12,700*0.80), (12,700*0.50), (12,700*0.70)	10,160	6,350	8,890
16" Pizza (26,600*1.50), (26,600*0.70), (26,600*1.30)	39,900	18,620	34,580
Add: desired ending inventory	630	190	320
Total pounds required	50,690	25,160	43,790
Less: Beginning inventory	(600)	(200)	(290)
Total units to be purchased	50,090	24,960	43,500
Unit price	$1.20	$2.30	$3.00
Total direct materials to be purchased	60,108	57,408	130,500	248,016