Question

Direct Materials Purchases Budget

Anticipated sales for Safety Grip Company were 74,000 passenger car tires and 22,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows:

	Passenger Car	Truck
Rubber	28 lb. per unit	65 lb. per unit
Steel belts	3 lb. per unit	8 lb. per unit

The purchase prices of rubber and steel are $2.9 and $3.8 per pound, respectively. The desired ending inventories of rubber and steel belts are 70,000 and 15,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 81,000 and 12,000 pounds, respectively.

Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y8. When required, enter unit prices to the nearest cent.

Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y8
	Rubber	Steel Belts	Total
Pounds required for production:
Passenger tires	lb.	lb.
Truck tires
Total pounds required	lb.	lb.
Total units purchased	lb.	lb.
Unit price	x $	x $
Total direct materials to be purchased	$	$	$

Answer 1

Safety Grip Company Direct Materials Purchases Budget For the Year Ending December 31, 20Y8
	Rubber	Steel belts	Total
Pounds required for production :
Passenger car tires	2,072,000 (74,000 x 28 )	222,000 (74,000 x 3 )
Truck tires	1,430,000 (22,000 x 65)	176,000 (22,000 x 8)
Add: Desired Ending inventory	70,000	15,000
Total	$3,572,000	413,000
Less : Estimated Beginning inventory	-81,000	-12,000
Total units to be purchased	$3,491,000	$401,000
Unit price	$2.90	$3.80
Total Direct materials to be purchased	$10,123,900	$1,523,800	$11,647,700