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.

The Bakery at the Lake

Direct Materials Budget

For the Months of July through September

July

August

September

Quarter

Less: Beginning inventory of direct materials

Quantity (lbs) to purchase

Multiply by: Cost per pound

Total cost of direct material purchases

July. . . . . . . . . . . . . . . . . . .	1,540 loaves
August. . . . . . . . . . . . . . . .	1,900 loaves
September. . . . . . . . . . . . .	1,700 loaves
October. . . . . . . . . . . . . . . .	1,540 loaves