Production Budget and Direct Materials Purchases Budgets

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

	Unit Sales	Dollar Sales ($)
January	70,000	133,000
February	80,000	152,000
March	50,000	95,000
April	62,000	117,800

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 39,000 jars. Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1.