Question

The Bakery with a View produces organic bread that is sold by the loaf. Each loaf requires 1/2 of a pound of flour. The bakery pays $3.00 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: 2 (Click the icon to view the units to be produced.) 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 151 pounds of flour on hand. Prepare the direct materials budget for the third quarter, with a column for each month and for the quarter.

Answer 1

0.57 The Bakery on the River Bank Direct Material Budgets for the Months of July to Septemeber July August September Quarter Units To be Produced 1510 1940 1700 5150 Multiply by: Pounds of Flour needed per unit 0.5 0.5 0.5 Quantity needed 755 970 8501 2575 ADD: Desired Ending Direct Material 194 170 146 146 Total Quantity Needed 949 1140 2721 Less: Beginning Direct Material 194 170 151 Quantity to Purchase 798 946 826 2570 Multiply by: Cost per Pound 3 Total Cost of Direct Materila Purchases 2394 28382478 7710 996 151 3 Desired Ending Inventory =20% of next month Quantity Needed July = (970*20%) 194 August =(850*20%) 170 Septmenber= ( 1460*0.5)*20% 146