Anticipated sales for Safety Grip Company were 74,000 passenger car tires and 22

Question

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 according to the following table:

The purchase prices of rubber and steel are $3.4 and $4.5 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, 20Y9.

Passenger Car Truck Rubber 33 lbs. per unit 77 lbs. per unit Steel belts 3 lbs. per unit 8 lbs. per unit

Explanation / Answer

SAFETY GRIP COMPANY

Direct materials Purchases budget

For the Year Ending December 31 20Y9

2442000

(74000*33)

222000

(74000*3)

1694000

(22000*77)

176000

(22000*8)

Rubber steel belts total Pounds required for production : Passenger car tires

2442000

(74000*33)

222000

(74000*3)

Truck tires

1694000

(22000*77)

176000

(22000*8)

Plus desired inventory Dec 31 20Y9 7000 15000 Total 4143000 413000 Less: estimated inventory Jan 1 20Y9 81000 12000 Total units to be purchased 4062000 401000 Unit price 3.4 4.5 Total direct materials to be purchased 13810800 1804500 15615300

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