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 80,000 176,000
February 50,000 110,000
March 60,000 132,000
April 66,000 145,200
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 38,000 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:
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.

Peanut Land Inc.
Production Budget
For the First Quarter of the Year
January February March Total
Sales fill in the blank 51303ef9907a032_1
80,000
fill in the blank 51303ef9907a032_2
50,000
fill in the blank 51303ef9907a032_3
60,000
fill in the blank 51303ef9907a032_4
190,000
Desired ending inventory fill in the blank 51303ef9907a032_5
fill in the blank 51303ef9907a032_6
fill in the blank 51303ef9907a032_7
fill in the blank 51303ef9907a032_8
Total needs fill in the blank 51303ef9907a032_9
fill in the blank 51303ef9907a032_10
fill in the blank 51303ef9907a032_11
fill in the blank 51303ef9907a032_12
Less: Beginning inventory fill in the blank 51303ef9907a032_13
fill in the blank 51303ef9907a032_14
fill in the blank 51303ef9907a032_15
fill in the blank 51303ef9907a032_16
Units produced fill in the blank 51303ef9907a032_17
fill in the blank 51303ef9907a032_18
fill in the blank 51303ef9907a032_19
fill in the blank 51303ef9907a032_20
2. Prepare a direct materials purchases budget for jars for the months of January and February.

Peanut Land Inc.
Direct Materials Purchases Budget for Jars
For January and February
January February Total
Production fill in the blank 1d0263feb021fad_1
fill in the blank 1d0263feb021fad_2
fill in the blank 1d0263feb021fad_3
Jar fill in the blank 1d0263feb021fad_4
1
fill in the blank 1d0263feb021fad_5
1
fill in the blank 1d0263feb021fad_6
1
Jars for production fill in the blank 1d0263feb021fad_7
fill in the blank 1d0263feb021fad_8
fill in the blank 1d0263feb021fad_9
Desired ending inventory fill in the blank 1d0263feb021fad_10
fill in the blank 1d0263feb021fad_11
fill in the blank 1d0263feb021fad_12
Total needs fill in the blank 1d0263feb021fad_13
fill in the blank 1d0263feb021fad_14
fill in the blank 1d0263feb021fad_15
Less: Beginning inventory fill in the blank 1d0263feb021fad_16
fill in the blank 1d0263feb021fad_17
fill in the blank 1d0263feb021fad_18
Jars purchased fill in the blank 1d0263feb021fad_19
fill in the blank 1d0263feb021fad_20
fill in the blank 1d0263feb021fad_21
Feedback
Fill in the units produced from Requirement 1.

Production in units x Materials per unit = Direct Materials Needed for Production

The desired ending inventory for materials is added to the materials to be purchased and is calculated based on future production. Note that the percentage of desired materials inventory does not match the percentage of desired completed inventory. Beginning inventory is calculated from current month production for the first month and is carried forward from the previous month for later months.

Direct Materials Needed for Production + Direct Materials in Desired Ending Inventory – Direct Materials in Beginning Inventory = Purchases

Review the "How to Prepare a Direct Materials Purchases Budget" example in the text.

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

Peanut Land Inc.
Direct Materials Purchases Budget for Peanuts
For January and February
January February Total
Production fill in the blank 7be279f5906901b_1
fill in the blank 7be279f5906901b_2
fill in the blank 7be279f5906901b_3
Ounces fill in the blank 7be279f5906901b_4
fill in the blank 7be279f5906901b_5
fill in the blank 7be279f5906901b_6
Ounces for production fill in the blank 7be279f5906901b_7
fill in the blank 7be279f5906901b_8
fill in the blank 7be279f5906901b_9
Desired ending inventory fill in the blank 7be279f5906901b_10
fill in the blank 7be279f5906901b_11
fill in the blank 7be279f5906901b_12
Total needs fill in the blank 7be279f5906901b_13
fill in the blank 7be279f5906901b_14
fill in the blank 7be279f5906901b_15
Less: Beginning inventory fill in the blank 7be279f5906901b_16
fill in the blank 7be279f5906901b_17
fill in the blank 7be279f5906901b_18
Ounces purchased fill in the blank 7be279f5906901b_19
fill in the blank 7be279f5906901b_20
fill in the blank 7be279f5906901b_21