CH 22. Q 4 Direct Materials Purchases Budget Lorenzo\'s Frozen Pizza Inc. has de
ID: 2431059 • Letter: C
Question
CH 22. Q 4
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" Pizza16" Pizza Budgeted production volume 16,300 25,500 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 Tomato Cheese 0.80 lb. per unit 0.50 0.70 1.50 lbs. per unit 0.70 1.30 In addition, Lorenzo's has determined the following information about each material Dough 580 lbs 610 lbs Tomato 230 lbs 220 lbs Cheese 360 lbs 390 lbs Estimated inventory, September 1 Desired inventory, September 30 Price per pound Prepare September's direct materials purchases budget for Lorenzo's Frozen Pizza Inc. When required, enter unit prices to the nearest cent. $1.10 $2.60 $3.30Explanation / Answer
Units required for production have been calculated by multiplying the number of units by the quantity required for each pizza. For example for a 12” pizza dough required is 0.8 lbs per unit, hence for making 16,300 pizzas units required for dough is ‘16300 * 0.8’ which is equal to 13040 as mentioned in the table above. Similarly all units required for production are calculated.
Desired inventory on 30th September is provided in the question.
Total units available is the sum of Units required for production and desired inventory on 30th September.
Estimated inventory on September 1 is provided in question.
Total units to be purchased have been calculated as = Total Units Available - Estimated inventory on September 1
Unit prices are provided in question.
Total direct material cost are calculated by multiplying ‘Total units to be purchased’ by ‘Unit Prices’.
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 13040 8150 11410 16" pizza 38250 17850 33150 Desired inventory, September 30 610 220 390 Total units available 51900 26220 44950 Estimated inventory, September 1 -580 -230 -360 Total units to be purchased 51320 25990 44590 Unit Price $1.10 $2.60 $3.30 Total direct materials to be purchased $56,452.00 $67,574.00 $147,147.00 $271,173.00