Question

Direct Materials Purchases Budget

Marino's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for June 2016:

	Units
	12" Pizza		16" Pizza
Budgeted production volume	14,100		20,500

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	0.90	lb. per unit	1.50	lbs. per unit
	Tomato	0.60		1.00
	Cheese	0.80		1.30

In addition, Marino's has determined the following information about each material:

	Dough		Tomato		Cheese
Estimated inventory, June 1, 2016	610	lbs.	230	lbs.	320	lbs.
Desired inventory, June 30, 2016	640	lbs.	220	lbs.	350	lbs.
Price per pound	$1.3		$2.1		$3.3

Prepare June's direct materials purchases budget for Marino's Frozen Pizza Inc. When required, enter unit prices to the nearest cent.

Marino's Frozen Pizza Inc.
Direct Materials Purchases Budget
For the Month Ending June 30, 2016
	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza
16" pizza
Total
Total units to be purchased
Unit price	x $	x $	x $
Total direct materials to be purchased	$	$	$	$

Answer 1

	Marino's Frozen Pizza Inc.
	Direct Materials Purchases Budget
	For the Month Ending June 30, 2016
					Dough	Tomato	Cheese	Total
	Units required for production:
	12" pizza (14,100)				12,690	8,460	11,280	32,430
	16" pizza (20,500)				30,750	20,500	26,650	77,900
	Total				43,440	28,960	37,930
	Total units to be purchased				43,470	28,950	26,680	99,100
	Unit price				$            1.30	$            2.10	$            3.30
	Total direct materials to be purchased				$        56,511	$        60,795	$        88,044	205,350
	Working Note:
1)	Calculation for total units to be purchased:
					Dough	Tomato	Cheese
	Desired inventory, June 30, 2016				640	220	350
	Add: Units required for production				43,440	28,960	26,650
					44,080	29,180	27,000
	Less: Estimated inventory, June 1, 2016				610	230	320
	Total direct material to be purchased				43,470	28,950	26,680