Question

1. 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	15,500		23,800

   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	520	lb.	220	lb.	360	lb.
   Desired inventory, September 30	550	lb.	210	lb.	390	lb.
   Price per pound	$1.20		$2.50		$3.10

   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

	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	12400	7750	10850
16" pizza	35700	16660	30940
Plus: Desired inventory, September 30	550	210	390
Total	48650	24620	42180
Less: Estimated inventory, September 1	520	220	360
Total units to be purchased	48130	24400	41820
Unit price	1.20	2.50	3.10
Total direct materials to be purchased	57756	61000	129642	248398
Note: Estimated inventory, September 1 can alternatively be written with a minus sign
Workings:
	Dough	Tomato	Cheese
Units required for production:
12" pizza	=15500*0.8	=15500*0.5	=15500*0.7
16" pizza	=23800*1.5	=23800*0.7	=23800*1.3