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:

	Passenger Car	Truck
Rubber	32 lbs. per unit	75 lbs. per unit
Steel belts	7 lbs. per unit	18 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 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.

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
Total	lbs.	lbs.
Total units purchased	lbs.	lbs.
Unit price	x $	x $
Total direct materials to be purchased	$	$	$

Answer 1

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