# 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 12,500 21,800 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 1 490 lb. 230 lb. 275 lb. Desired inventory, September 30 580 lb. 185 lb. 340 lb. Price per pound $0.50$2.20 $2.60 Prepare September's direct materials purchases budget for Lorenzo’s Frozen Pizza Inc. BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 #### Solutions Chapter Section Chapter 22, Problem 22.9EX Textbook Problem ## Direct materials purchases budgetLorenzo'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 12,500 21,800 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 1 490 lb. 230 lb. 275 lb. Desired inventory, September 30 580 lb. 185 lb. 340 lb. Price per pound$0.50 $2.20$2.60 Prepare September's direct materials purchases budget for Lorenzo’s Frozen Pizza Inc.

Expert Solution
To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

Production Budget shows the quantities of units that a company must produce to meet the budgeted sales and inventory.

To Prepare: The September’s direct materials purchases budget for Incorporation L.

### Explanation of Solution

The following table shows theSeptember’s direct materials purchases budget.

 Incorporation L Direct Materials Purchases Budget For The Month Ending September 30 Particulars Dough Tomato Cheese Units Required For Production 12” Pizza 10,000(1) 6,250 (2) 8,750 (3) 16” Pizza 32,700 (4) 15,260 (4) 28,340 (6) Add: Desired Inventory, September 30 580 185 340 Total Pounds Required 43,280 21,695 37,430 Less: Estimated Inventory, September 1 (490) (230) (275) Total Pounds To Be Purchased (A) 42,790 21,465 37,155 Unit Price Per Pound (B) $0.50$2.20 $2.60 Total (A) × (B)$21,395 $47,223$96,603 Total Direct Materials To Be Purchased \$165,221

Table (1)

Working Notes:

Calculate the direct material (dough) for 12” pizza.

Direct material (dough) cost for 12" pizza=12,500×0.80lb.=10,000 (1)

Calculate the direct material (tomato) for 12” pizza.

Direct material (tomato) cost for 12" pizza=12,500×0

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