Anticipated sales for Sure Grip Tire Company were 47,000 passenger car tires and
ID: 2527847 • Letter: A
Question
Anticipated sales for Sure Grip Tire Company were 47,000 passenger car tires and 14,000 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 44,000 and 9,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 52,000 and 7,000 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.
Passenger Car Truck Rubber 32 lbs. per unit 75 lbs. per unit Steel belts 7 lbs. per unit 18 lbs. per unitExplanation / Answer
Sure Grip Tire Company Direct Materials Purchases Budget For the Year Ending December 31, 2016 Rubber Steel Belts Total Pounds required for production: Passenger tires 1504000 329000 Truck tires 1050000 252000 Add: Desired ending inventories 44000 9000 Total 2598000 590000 Less: Estimated beginning inventories 52000 7000 Total units purchased 2546000 583000 Unit price 3.4 4.5 Total direct materials to be purchased 8656400 2623500 11279900
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