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 16,000 25,700 Budgeted production volume 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, Tobin's has determined the following information about each material: Dough Tomato Cheese Estimated inventory, November 1 560 lbs. 180 lbs. 350 lbs. Desired inventory, November 30 590 lbs. 170 lbs. 380 lbs. Price per pound $1.20 $2.40 $3.00 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. Tobin's Frozen Pizza Inc. Direct Materials Purchases Budget For the Month Ending November 30 Direct Materials Direct Materials Direct Materials Dough Tomato Cheese Total Units required for production: 12" pizza 16" pizza Desired inventory, November 30 Total units available Estimated inventory, November 1 diann diann Total units to be purchased Unit Price X $ Total direct materials to be purchased | Static Budget versus Flexible Budget The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown Company Machining Department Monthly Production Budget Wages $1,190,000 Utilities 74,000 Depreciation 122,000 Total $1,386,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced May $1,307,000 104,000 June 1,240,000 94,000 July 1,187,000 85,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 1,386,000. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per hour $21.00 Utility cost per direct labor hour $1.30 Direct labor hours per unit 0.50 Planned monthly unit production 113,000 a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places Hagerstown Company Machining Department Budget For the Three Months Ending July 31 May June July Units of production 104,000 94,000 85,000 Wages Utilities 10000 40002 Depreciation s Total Supporting calculations: Units of production 104,000 94,000 85,000 Hours per unit x Total hours of production X $ x 5 Wages per hour X$ Total wages Total hours of production Utility costs per hour x $ Total utilities Feedback b. Compare the flexible budget with the actual expenditures for the first three months. May June July Total flexible budget $ $ $ Actual cost Excess of actual cost over budget $ $ What does this comparison suggest? The Machining Department has performed better than originally thought. The department is spending more than would be expected