Exercise 9-52 Production Budget and Direct Materials Purchases Budgets Objective 2 Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first 4 months of the year is as follows: January February March April Unit Sales Dollar Sales ($) 36,000 108,000 38,000 114,000 41,000 123,000 43,000 129,000 EXCEL Company policy requires that ending inventories for each month be 25% of next month's sales. At the beginning of January, the inventory of peanut butter is 9,300 jars. Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar set (a glass jar and lid). Company policy requires that ending inventories of raw materials for each month be 10% of the next month's production needs. That policy was met on January 1. Required: 1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total. 2. Prepare separate direct materials purchases budgets for jars and for peanuts for the months of January and February. 4. Worksheet: Follow this format. Be sure to link variables to worksheet. Formulas should be included in the links. A link begins in the destination cell with "=" and then you pick up the variable from the variables page. If necessary build a formula and add more variables. When complete hit enter. Peanut Land Inc. Production Budget For the First Quarter of the Year January February March Total Sales Desired inventory Total needs Less: beginning inventory Units produced Jar Sales Production X 1 jar Jars needed for production Desired ending inventory Total needs Less: Beginning inventory Jars purchased Peanuts Production X 24 oz Oz for production Desired inventory Total needed Less: Beginning inventory Oz purchased Peanut Land Inc. Direct Materials Purchases Budget For the January and February January February Total 5. Check figures. Units produced in January, 36,200 and in February 38,750. Jars purchased in January, 36,455 and in February, 39,025. Ounces of peasants purchased in January, 874,920 and In February, 936,600