Question

1. Direct Materials Purchases Budget

   Anticipated sales for Safety Grip Company were 40,000 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	31 lbs. per unit	72 lbs. per unit
   Steel belts	7 lbs. per unit	18 lbs. per unit

   The purchase prices of rubber and steel are $3.1 and $4.1 per pound, respectively. The desired ending inventories of rubber and steel belts are 38,000 and 8,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 44,000 and 6,000 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 1, 20Y9 Desired inventory, December 31, 20Y9 Direct labor hour Estimated inventory, December 1, 20Y9 Estimated inventory, December 31, 20Y9
   Total pounds available	lbs.	lbs.
   Depreciation Desired inventory, January 1, 20Y9 Desired inventory, January 31, 20Y9 Estimated inventory, January 1, 20Y9 Estimated inventory, January 31, 20Y9
   Total units purchased	lbs.	lbs.
   Unit price	x $	x $
   Total direct materials to be purchased	$	$	$

   Feedback

   Remember to take into account materials required for production, desired ending materials inventory and estimated beginning materials inventory when calculating direct materials to be purchased.

   Learning Objective 4.

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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	1240000	280000
Truck tires	864000	216000
Desired inventory, December 31, 20Y9	38000	8000
Total pounds available	2142000	504000
Estimated inventory, January 1, 20Y9	44000	6000
Total units purchased	2098000	498000
Unit price	3.1	4.1
Total direct materials to be purchased	6503800	2041800	8545600
Estimated inventory, January 1, 20Y9 can alternatively be written with a minus sign
Workings:
	Rubber	Steel Belts
Pounds required for production:
Passenger tires	=40000*31	=40000*7
Truck tires	=12000*72	=12000*18