Question

1. Anticipated sales for Sure Grip Tire Company were 39,000 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:

   	Passenger Car	Truck
   Rubber	27 lbs. per unit	63 lbs. per unit
   Steel belts	3 lbs. per unit	8 lbs. per unit

   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 37,000 and 8,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 43,000 and 6,000 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.

   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	lbs.	lbs.
   Truck tires
   Plus desired inventory, December 1, 2016
   Total	lbs.	lbs.
   Less estimated inventory, January 1, 2016
   Total units purchased	lbs.	lbs.
   Unit price	x $	x $
   Total direct materials to be purchased	$	$	$

Answer 1

SOLUTION

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 (39,000*27), (39,000*3)	1,053,000	117,000
Truck tires (12,000*63), (12,000*8)	756,000	96,000
Plus: Desired inventory, December 1, 2016	37,000	8,000
Total	1,846,000	221,000
Less: Estimated inventory, January 1, 2016	(43,000)	(6,000)
Total units purchased	1,803,000	215,000
Unit price	$3.4	$4.5
Total direct materials to be purchased	$6,130,200	$967,500	$7,097,700