Chapter 9, Problem 9.6SE

Direct materials budget (Learning Objective 2)

Breadmaster produces organic bread that is sold by the loaf. Each loaf requires 1/2 of a pound of flour. The bakery pays $2.00 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:

July	1,540 loaves
August	1,820 loaves
September	1,660 loaves
October	1,460 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 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.