Question

Direct materials purchases budget

Tobin’s Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for November:

	Units
	12" Pizza		16" Pizza
Budgeted production volume	61,000		41,000

There are three direct materials 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	0.55	lb. per unit	0.80	lbs. per unit
	Tomato	0.25		0.40
	Cheese	0.70		1.20

In addition, Tobin’s has determined the following information about each material:

	Dough		Tomato		Cheese
Estimated inventory, November 1	2,700	lbs.	1,100	lbs.	2,900	lbs.
Desired inventory, November 30	2,200	lbs.	1,000	lbs.	2,500	lbs.
Price per pound	$0.30		$0.40		$0.65

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

Prepare November's direct materials purchases budget for Tobin’s Frozen Pizza Inc. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Round your final answers to the nearest dollar.

Tobin’s Frozen Pizza Inc.
Direct Materials Purchases Budget
For the Month Ending November 30
	Dough		Tomato		Cheese		Total
Units required for production:
12" pizza
16" pizza
Total units available
Total units to be purchased
Unit price	x	$	x	$	x	$
Total direct materials to be purchased		$		$		$		$

Answer 1

Solution

Tobin’s Frozen Pizza Inc.
Direct Materials Purchases Budget
For the Month Ending November 30
	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza	33550	15250	42700
16" pizza	32800	16400	49200
Desired ending inventory	2200	1000	2500
Total pounds required	68550	32650	94400
Less: Beginning inventory	2700	1100	2900
Total units to be purchased	65850	31550	91500
Unit price	$        0.30	$           0.40	$           0.65
Total direct materials to be purchased	$19,755.00	$   12,620.00	$   59,475.00	$ 91,850.00

Working

Tobin’s Frozen Pizza Inc.
Direct Materials Purchases Budget
For the Month Ending November 30
	Dough	Tomato	Cheese
Units required for production:
12" pizza	=61000*0.55	=61000*0.25	=61000*0.7
16" pizza	=41000*0.8	=41000*0.4	=41000*1.2