59-5 Direct materials budget (Learning Objective 2) The Bakery by the Bay 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 1,460 loaves August.. 1,920 loaves September.. 1,760 loaves October.. 1,480 loaves The bakery has a policy that it will have 10% of the following month's flour needs on hand at the end of each month. At the end of June, there were 100 pounds of flour on hand. Prepare the direct materials budget for the third quarter, with a column for each month and for the quarter. Sept. Quarter The Bakery by the Bay Direct Materials Budget For the Months of July through September July August Units to be produced Multiply by: Pounds of flour needed per unit Quantity (lbs.) needed for production Plus: Desired end inventory of DM (10% of the amount needed for next month's production) Total quantity (lbs.) needed Less: Beginning inventory of DM Quantity (lbs.) to purchase Multiply by: Cost per pound Total cost of DM purchases