Question

Direct Materials Purchases Budget Anticipated sales for Safety Grip Company were 42,000 passenger car tires and 19,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows: Passenger Car Truck Rubber 35 lbs. per unit 78 lbs. per unit Steel belts 5 lbs. per unit 8 lbs. per unit The purchase prices of rubber and steel are $1.20 and $0.80 per pound, respectively. The desired ending inventories of rubber and steel belts are 40,000 and 10,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 46,000 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

Answer and Explanation:

The preparation of direct materials purchases budget is shown below:-

Safety Grip Company

Direct Materials Purchases Budget

For the Year Ending December 31, 2019

Rubber Steel Belts

Pounds required for production

Passenger tires $1,470,000 210,000

(42,000 × 35 lbs) (42,000 × 5 lbs)

Truck tires 1,482,000 1520,00

(19,000 × 78 lbs) (42,000 × 8 lbs)

Add: Desired ending inventory 40,000 10,000

Total 2,992,000 372,000

Less: Estimated beginning

inventory 46,000 8,000

Total units purchased 2,946,000 364,000

Unit price $1.20 $0.80

Total direct materials to be

purchased $3,535,200 $291,200

(2,946,000 × $1.20) (364,000 × $0.80)

Therefore by above we have prepared the direct materials purchases budget.