Question

Direct Materials Purchases Budget Anticipated sales for Sure Grip Tire Company were 55,000 passenger car tires and 17,000 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 6 lbs. per unit 15 bs. 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 52,000 and 11,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 61,000 and 9,000 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 Compamy Direct Materials Purchases Budget For the Year Ending December 31, 2016 Rubber Steel Belts Total

Answer 1

Direct material purchase budget

	Rubber	steel belts	Total
Pounds required for production
Passenger tires	55000*32 = 1760000	55000*6 = 330000
Truck tires	17000*75 = 1275000	17000*15 = 255000
Desired ending inventory	52000	11000
Total	3087000	596000
Beginning inventory	-61000	-9000
Total units purchased	3026000	587000
Unit price	3.4	4.5
Total direct materials to be purchased	10288400	2641500	12929900