Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first 4 months of the year is as follows:

Unit Sales Dollar Sales ($)

January......................36,000.........................108,000

February.....................38,000.........................114,000

March........................41,000.........................123,000

April.........................43,000.........................129,000

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 9,300 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar set (a glass jar and lid). Company policy requires that ending inventories of raw materials for each month be 10% 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.

2. Prepare separate direct materials purchases budgets for jars and for peanuts for the months of January and February.