Question

Direct Materials Purchases Budget

Anticipated sales for Safety Grip Company were 52,000 passenger car tires and 16,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:

	Passenger Car	Truck
Rubber	35 lbs. per unit	82 lbs. per unit
Steel belts	3 lbs. per unit	8 lbs. per unit

The purchase prices of rubber and steel are $3.5 and $4.6 per pound, respectively. The desired ending inventories of rubber and steel belts are 49,000 and 11,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 57,000 and 8,000 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
Total pounds available	lbs.	lbs.
Total units purchased	lbs.	lbs.
Unit price	x $	x $
Total direct materials to be purchased	$	$	$

Answer 1

Direct Material Purchase budget
				Rubberr	Steel Belts	Total
Pounds required for production:
Pssenger tires				1820000	156000
Truck tires				1312000	128000
Pounds required for production				3132000	284000
Add; Desired ending inventory				49000	11000
Total Needs				3181000	295000
Less: beginning Inventory				57000	8000
Pounds to be purchased				3124000	287000
unit price				3.5	4.6
Total direct material to be purchased				10934000	1320200	12254200