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	147,000
February	85,000	178,500
March	50,000	105,000
April	54,000	113,400

Company policy requires that ending inventories for each month be 20% 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.

Required:

Question Content Area

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 a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

Peanut Land Inc. Production Budget For the First Quarter of the Year Sales Desired ending inventory Total needs Less: Beginning inventory Units produced Peanut Land Inc. Direct Materials Purchases Budget for Jars For January and February January February Total Production Jar Jars for production Desired ending inventory Total needs Less: Beginning inventory Jars purchased Peanut Land Inc. Mipart Mutariale Durrhacoc Durlot for Daumute