Direct Materials Purchases Budget Anticipated sales for Sure Grip Tire Company w

Question

Direct Materials Purchases Budget

Anticipated sales for Sure Grip Tire Company were 53,000 passenger car tires and 16,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:

13 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 50,000 and 11,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 58,000 and 8,000 pounds, respectively.

Prepare a direct materials purchases budget for Sure Grip Tire Company for the year ended December 31, 2016. When required, enter unit prices to the nearest cent.

13 lbs. per unit

Explanation / Answer

Statement showing Direct Materials Budget Particulars Rubber Steel Belt Total Pounds reqd Sales of Passenger Car    1,537,000.00        265,000.00      1,802,000.00 Pounds reqd Sales of Truck    1,088,000.00        208,000.00      1,296,000.00 Total Pounds required for sales    2,625,000.00        473,000.00      3,098,000.00 Opening Inventory          58,000.00            8,000.00 Ending Inventory          50,000.00          11,000.00 Total Pounds to be purchased = Sales+Closing - opening    2,617,000.00        476,000.00 Price per Pound                     3.60                     4.70 Total Purchase Costs    9,421,200.00    2,237,200.00    11,658,400.00

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