Calculator Direct Materials Purchases Budget Anticipated sal

Calculator Direct Materials Purchases Budget Anticipated sales for Sure Grip Tire 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 31 lbs. per unit 72 lbs. per unit Steel belts 3 lbs. per unit 8 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 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 Rubber Steel Belts Total Pounds required for production: Passenger tires Truck tires Total Total units purchased bs Trash Previous Next

Solution

Calculations and explanations:

1. Rubber for passenger tires = 40,000*31 = 1,240,000 lbs

2. Rubber for truck tires = 12,000*72 = 864,000 lbs

3. Steel belts for passenger tires = 40,000*3 = 120,000 lbs

4. Steel belts for truck tires = 12,000*8 = 96,000 lbs

5. Total requirement = requirement (as computed above)-beginning inventory

6. Purchase = total requirement+desired ending inventory

	Rubber		Steel Belts		Total
Pounds required for production:
Passenger tires	1,240,000.00	lbs	120,000.00	lbs
Truck tires	864,000.00		96,000.00
less: beginning inventory	44,000.00		6,000.00
Total	2,060,000.00	lbs	210,000.00	lbs
Add: ending inventory	38,000.00		8,000.00
Total units purchased	2,098,000.00	lbs	218,000.00	lbs
Unit price	3.10	$	4.10	$
Total direct materials to be purchased	6,503,800.00	$	893,800.00	$	7,397,600.00