The bakery at the Lake produces organic bread that is sold by the loaf. Each loaf requires 1/2 of a pound of flour. The bakery pays

$3.50 per pound of the organic flour used in its loaves. The bakery expects to produce the following number of loaves in each of the upcoming four months:

The bakery has a policy that it will have 20% of the following month's flour needs on hand at the end of each month. At the end of June, there were 154 pounds of flour on hand. Prepare the direct materials budget for the third quarter, with a column for each month and for the quarter.

July. . . . . . . . . . . . . . . . . . .

1,540 loaves

August. . . . . . . . . . . . . . . .

1,900 loaves

September. . . . . . . . . . . . .

1,700 loaves

October. . . . . . . . . . . . . . . .

1,540 loaves

The Bakery at the Lake
Direct Materials Budget
For the Months of July through September
	July	August	September	Quarter
Units to be produced	1,540	1,900	1,700	5,140
Multiply by: Pounds of flour needed per unit	0.50	0.50	0.50	0.50
Quantity needed (lbs) for production	770	950	850	2,570
Plus: Desired ending inventory of direct materials	190	170	154	154
Total quantity (lbs) needed	960	1,120	1,004	2,724

Less: Beginning inventory of direct materials
Quantity (lbs) to purchase
Multiply by: Cost per pound
Total cost of direct material purchases