On January 1, 2013 the Jorge Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2013.

Sales units: ........ First quarter 5,000; second quarter 6,000; third quarter 7,000

Ending raw materials inventory: . 50% of the next quarter’s production requirements

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

Third-quarter production: .................... 7,250 units

The ending raw materials and finished goods inventories at December 31, 2012, follow the same percentage relationships to production and sales that occur in 2013. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.

Instructions

(a) Prepare a production budget by quarters for the 6-month period ended June 30, 2013.

(b) Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2013.