Question

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.

Answer 1

To calculate the bakery's direct materials budget for the third quarter, the flour needed for production, the desired ending inventory for each month, and the beginning inventory were taken into account, leading to a total flour purchase of 2,536 pounds and a total cost of $6,340 for the quarter.

Step-by-step explanation:

To prepare the direct materials budget for the third quarter for the bakery, we need to calculate the flour requirements for each month and the entire quarter, considering their policy of having 20% of the following month's flour needs on hand at the end of each month.

July Flour Requirements

Loaves: 1,500

Flour per loaf: 1/2 pound

Total flour: 1,500 loaves × 1/2 = 750 pounds

Desired ending inventory (20% of August's needs): 1,880 loaves × 1/2 × 20% = 188 pounds

Total needs (total flour + desired ending inventory): 750 + 188 = 938 pounds

Beginning inventory: 150 pounds

Flour to purchase (total needs - beginning inventory): 938 - 150 = 788 pounds

August Flour Requirements

Loaves: 1,880

Flour per loaf: 1/2 pound

Total flour: 1,880 loaves × 1/2 = 940 pounds

Desired ending inventory (20% of September's needs): 1,680 loaves × 1/2 × 20% = 168 pounds

Total needs: 940 + 168 = 1,108 pounds

Beginning inventory (July's ending inventory): 188 pounds

Flour to purchase: 1,108 - 188 = 920 pounds

September Flour Requirements

Loaves: 1,680

Flour per loaf: 1/2 pound

Total flour: 1,680 loaves × 1/2 = 840 pounds

Desired ending inventory (20% of October's needs): 1,560 loaves × 1/2 × 20% = 156 pounds

Total needs: 840 + 156 = 996 pounds

Beginning inventory (August's ending inventory): 168 pounds

Flour to purchase: 996 - 168 = 828 pounds

Total for the Quarter

July's purchase: 788 pounds

August's purchase: 920 pounds

September's purchase: 828 pounds

Total flour to purchase for the quarter: 788 + 920 + 828 = 2,536 pounds

The cost of flour is $2.50 per pound, so the budget for the quarter will be 2,536 pounds × $2.50 = $6,340.

Answer 2

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

Step-by-step 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