On January 1, 2022, the Waterway Company budgeted the following for the year ended December 31. 2022:

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Sales units: First quarter 4,400; second quarter 5,300; third quarter 6,100; fourth quarter 6,600 units; First and second quarters of 2023: 7,000 units.

Ending raw materials inventory: 40% of the next quarter's production requirements.

Ending finished goods inventory: 30% of the next quarter's expected sales in units.

Desired production for first quarter of 2023 is 7,000 units.

3 kilograms of raw materials are needed to make each unit of finished goods. Raw materials purchased are expected to cost $3 per kilogram.

Prepare a production budget and a direct materials budget by quarters for the year ended December 31, 2022.