Direct Materials Purchases Budget Anticipated sales for Safety Grip Company were

Question

Direct Materials Purchases Budget

Anticipated sales for Safety Grip Company were 41,000 passenger car tires and 12,000 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 $3.3 and $4.3 per pound, respectively. The desired ending inventories of rubber and steel belts are 39,000 and 8,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 45,000 and 6,000 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

Direct material purchase budget :

Rubber Steel belts Total Pounds required for production: Passenger tires 1353000 123000 Truck tires 924000 96000 Desired ending inventory 39000 8000 Total pounds available 2316000 227000 Less: Beginning inventory -45000 -6000 Total units purchased 2271000 221000 Unit price 3.3 4.3 Total direct materials to be purchased 7494300 950300 8444600

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