Question

Direct Materials Purchases Budget Anticipated sales for Sure Grip Tire Company were 65,000 passenger car tires and 20,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table: Passenger CarTruck Rubber 25 lbs. per unit 50 lbs. per unit Steel belts 5lbs. per unit 13 lbs. per unit The purchase pnces of rubber and steel are?3.4 and $4.5 per pound, respectively. The desired ending inventones of rubber and steel belts are 61,000 and 13,000 pounds, respectively. The esbmated begining Inventories for rubber and steel belts are 72,000 and 11,000 pounds, respectively, Prepare a direct materials purchases budget for Sure Grip Tire Comparny for the year ended December 31, 2016. When required, enter unit prices to the nearest cent Sure Girb Tre Company Orect Materals Purchases Budget For the Year Ending Dacember 31, 2016 Rubber Steel Belts Total Pounds required for production: Passenger tres Truck tires Total bs. Total units purchased Unit price Total drect truterias to be purchased S( ?

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	1,625,000 lbs.	325,000 lbs.
	Truck tires	1,160,000 lbs	260,000 lbs
	Plus desired inventory, Dec. 31, 2016	61,000 lbs	13,000 lbs
	Total	2,846,000 lbs	598,000 lbs
	Less estimated inventory, Jan. 1, 2016	72,000   lbs	11,000 lbs
	Total units purchased	2,774,000 lbs.	587,000 lbs.
	Unit price	x $3.4	x $4.50
	Total direct materials to be purchased	$9,431,600	$2,641,500	$12,073,100
Working Notes:
	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	1,625,000 lbs.	325,000 lbs.
	Truck tires	1,160,000 lbs	260,000 lbs
	Plus desired inventory, Dec. 31, 2016	61,000 lbs	13,000 lbs
	Total	2,846,000 lbs	598,000 lbs
	Less estimated inventory, Jan. 1, 2016	72,000   lbs	11,000 lbs
	Total units purchased	2,774,000 lbs.	587,000 lbs.
	Unit price	x $3.4	x $4.50
	Total direct materials to be purchased	$9,431,600	$2,641,500	$12,073,100
Notes:	Pounds required for production:
		Passenger tires	Truck tires
	Anticipated sales	65,000	20,000
	Pounds required for production:
	Rubber	25 lbs per unit	58 lbs per unit
		65,000 x 25 = 1,625,000 lbs	20,000 x 58 = 1,160,000 lbs
	Steel Belts	5 lbs per unit	13 lbs per unit
		65,000 x 5 = 325,000 lbs	20,000 x 13 = 260,000 lbs
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