Question

Direct Materials Purchases Budget

Anticipated sales for Safety Grip Company were 57,000 passenger car tires and 17,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:

	Passenger Car	Truck
Rubber	34 lbs. per unit	79 lbs. per unit
Steel belts	3 lbs. per unit	8 lbs. per unit

The purchase prices of rubber and steel are $3.6 and $4.7 per pound, respectively. The desired ending inventories of rubber and steel belts are 54,000 and 11,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 63,000 and 9,000 pounds, respectively.

Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9.

Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y9
	Rubber	Steel Belts	Total
Pounds required for production:
Passenger tires	lbs.	lbs.
Truck tires
Desired inventory, December 31, 20Y9
Total pounds available	lbs.	lbs.
Estimated inventory, January 1, 20Y9
Total units purchased	lbs.	lbs.
Unit price	x $	x $
Total direct materials to be purchased	$	$	$

Answer 1

Opening Stock + Purchases - Closing stock = stock required for production
Purchases = stock required for production + closing stock - opening stock
Safety Grip Company
Direct Materials Purchases Budget
For the year ending December 31, 20Y9
		Rubber		Steel Belts		Total
Pounds required for Production:
Passenger tires
(57000*34)	(a)	1938000	lbs.
(57000*3)	(a)			171000	lbs.
Truck tires
(17000*79)	(a)	1343000	lbs.
(17000*8)	(a)			136000	lbs.
Desired Inventory, December 31, 20Y9	(b)	54000	lbs.	11000	lbs.
Total Pounds available	(c)=(a)+(b)	1397000	lbs.	147000	lbs.
Estimated Inventory, January 1, 20Y9	(d)	63000	lbs.	9000	lbs.
Total units purchased	(e)=(c)-(d)	1334000	lbs.	138000	lbs.
Unit Price	(f)	3.6	$	4.7	$
Total Direct Materials to be purchased	(e)*(f)	48,02,400		6,48,600		54,51,000