Question

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		25,600

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	540	lbs.	180	lbs.	320	lbs.
Desired inventory, June 30, 2016	570	lbs.	170	lbs.	350	lbs.
Price per pound	$1.4		$2.3		$3.4

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

Solution:
	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	12690	8460	11280
	16" pizza	38400	25600	33280
	Total	51090	34060	44560
	Total units to be purchased	51120	34050	44590
	Unit price	x $1.4	x $2.3	x $3.40
	Total direct materials to be purchased	$71,568	$78,315	$151,606	$301,489
Working Notes:
	For the budgeted production, required material is given below
		12" pizza	Total material required	16" pizza	Total material required
	Budgeted production volume	14100		25600
	Dough required	0.9 per unit	=14,100 x 0.90 =12,690	1.5 per unit	=25,600 x 1.5 =38,400
	Tomato	0.60 per unit	=14,100 x0.60 =8,460	1 per unit	=25,600 x 1 =25,600
	Cheese	0.80 per unit	=14,100 x0.80 =11,280	1.30 per unit	=25,600 x 1.30 =33,280
	Computation of units required to be purchased and price
		Dough	Tomato	Cheese
	Desired inventory, June 30, 2016	570	170	350
Add:	Units required for production:	51090	34060	44560	as calculated above
Less:	Estimated inventory, June 1, 2016	540	180	320
	Units required to be purchased	51120	34050	44590
	Unit price of materials	1.4	2.3	3.4
	Total direct materials to be purchased	71568	78315	151606
	[unit price x units required]
	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	12690	8460	11280
	16" pizza	38400	25600	33280
	Total	51090	34060	44560
a	Total units to be purchased	51120	34050	44590
b	Unit price	x $1.4	x $2.3	x $3.40
c=a xb	Total direct materials to be purchased	$71,568	$78,315	$151,606	$301,489