Question

# Direct Materials Purchases Budget Lorenzo’s Frozen Pizza Inc. has determined from its production budget the following...

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 15,800 22,000

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

 Dough Tomato Cheese Estimated inventory, September 1 620 lb. 220 lb. 380 lb. Desired inventory, September 30 650 lb. 210 lb. 410 lb. Price per pound \$1.00 \$2.40 \$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 \$ \$ \$ \$

Solution:

Lorenzo’s Frozen Pizza Inc. Direct Material Purchase Budget for the month ending september 30

 Dough Tomato Cheese Total Units required for production 12" pizza 12,640 (15800*0.8) 7,900 (15800*0.5) 11,060 (15800*0.7) 16" pizza 33,000 (22000*1.50) 15,400 (22000*0.7) 28,600 (22000*1.30) Add: Desired inventory sept.30 650 210 410 Total pounds required 46,290 23,510 40,070 Less: Estimated inventory sep 1 620 220 380 Total units to be purchased 45,670 23,290 39,690 Unit price 1.00 2.40 3.00 Total direct material to be purchased 45,670 55,896 119,070 220,636

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