Question

Anticipated sales for Safety Grip Company were 74,000 passenger car tires and 22,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:

	Passenger Car	Truck
Rubber	33 lbs. per unit	77 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 70,000 and 15,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 81,000 and 12,000 pounds, respectively.

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

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 car tires	2442000 (74000*33)	222000 (74000*3)
Truck tires	1694000 (22000*77)	176000 (22000*8)
Plus desired inventory Dec 31 20Y9	7000	15000
Total	4143000	413000
Less: estimated inventory Jan 1 20Y9	81000	12000
Total units to be purchased	4062000	401000
Unit price	3.4	4.5
Total direct materials to be purchased	13810800	1804500	15615300