Question

Anticipated sales for Safety Grip Company were 75,000 passenger car tires and 23,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows:

	Passenger Car	Truck
Rubber	27 lbs. per unit	63 lbs. per unit
Steel belts	4 lbs. per unit	10 lbs. per unit

The purchase prices of rubber and steel are $3.20 and $4.20 per pound, respectively. The desired ending inventories of rubber and steel belts are 71,000 and 15,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 83,000 and 12,000 pounds, respectively.

Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9.

Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y9
	Rubber	Steel Belts	Total
Pounds required for production:
Passenger tires	lbs.	lbs.
Truck tires
Desired inventory, December 31, 20Y9
Total pounds available	lbs.	lbs.
Estimated inventory, January 1, 20Y9
Total units purchased	lbs.	lbs.
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, 20Y9
	Rubber	Steel Belts	Total
Pounds required for production:
- Passenger tires - 75,000	2,025,000 lbs.	300,000 lbs
- Truck tires - 23,000	1,449,000 lbs	230,000 lbs
Add: Desired inventory, December 31, 20Y9	71,000	15,000
Total pounds available	3,545,000	545,000
Less : Estimated inventory, January 1, 20Y9	-83,000	-12,000
Total units purchased	3,462,000	533,000
Unit price	$ 3.20	$ 4.20
Total direct materials to be purchased	$ 11,078,400	$ 2,238,600	$ 13,317,000