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	16,600		27,200

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	640	lb.	200	lb.	300	lb.
Desired inventory, September 30	670	lb.	190	lb.	330	lb.
Price per pound	$1.20		$2.50		$3.40

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 Units required for production: Cheese Total 12" pizza 16" pizza Total pounds required Total units to be purchased Unit price Total direct materials to be purchased $

Answer 1

	Forenzo's Frozen Pizza Inc.
	Direct Materials Purchases Budget
	For the Month Ending September 30
	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza	13280	8300	11620
16" pizza	40800	19040	35360
Plus: Desired inventory, September 30	670	190	330
Total pounds required	54750	27530	47310
Less: Estimated inventory, September 1	(640)	(200)	(300)
Total units to be purchased	54110	27330	47010
Unit price	1.20	2.50	3.40
Total direct materials to be purchased	64932	68325	159834	293091
Note: Estimated inventory, September 1 can alternatively be written without parenthesis
Workings:
	Dough	Tomato	Cheese
Units required for production:
12" pizza	=16600*0.8	=16600*0.5	=16600*0.7
16" pizza	=27200*1.5	=27200*0.7	=27200*1.3