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15 July, 11:44

The Bakery produces organic bread that is sold by the loaf. Each loaf requires 1/2 of a pound of flour. The bakery pays $2.50 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:

Data Table

July 1,500 loaves

August 1,880 loaves

September 1,680 loaves

October 1,560 loaves

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 150 pounds of flour on hand. Prepare the direct materials budget for the third quarter, with a column for each month and for the quarter.

Begin the direct materials by determining the total quantity needed, then complete the budget.

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  1. 15 July, 13:41
    0
    Data Table

    Month July August September The third quarter

    Flour budget (pound) 938 pounds 1,108 pounds 996 pounds 3,042 pounds

    Flour budget (USD) $2,345 $2,770 $2,490 $7,605

    Explanation:

    Flour needs to produces organic bread:

    In July = 1,500 x 1/2 = 750 pounds

    In August = 1,880 x 1/2 = 940 pounds

    In September = 1,680 x 1/2 = 840 pounds

    In October = 1,560 x 1/2 = 780 pounds

    Flour needs on hand at the end of:

    July = 940 x 20% = 188 pounds

    August = 840 x 20% = 168 pounds

    September = 780 x 20% = 156 pounds

    Total flour needs:

    In July = 750 + 188 = 938 pounds

    In August = 940 + 168 = 1,108 pounds

    In September = 840 + 156 = 996 pounds

    In the third quarter = 3,042 pounds

    The bakery pays $2.50 per pound of the organic flour used in its loaves.

    In July = 938 pounds x $2.50 = $2,345

    In August = 1,108 pounds $2.50 = $2,770

    In September = 996 pounds $2.50 = $2,490

    In the third quarter = $7,605

    Data Table

    Month July August September The third quarter

    Flour budget (pound) 938 pounds 1,108 pounds 996 pounds 3,042 pounds

    Flour budget (USD) $2,345 $2,770 $2,490 $7,605
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