Question

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.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

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:

Rubber 35 lbs. per unit

Steel belts 5 lbs. per unit

Truck:

Rubber 78 lbs. per unit

Steel belts 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.

We need to determine the necessary purchases for the period:

Rubber:

Car production= 42,000*35= 1,470,000lbs

Truck production= 19,000*78= 1,482,000lbs

Ending inventory= 40,000lbs

Beginning inventory= (46,000)

Total purchase= 2,946,000 lbs

Total cost= 2,946,000*1.20= $3,535,200

Steel:

Car production= 42,000*5= 210,000lbs

Truck production= 19,000*8= 152,000lbs

Ending inventory= 10,000lbs

Beginning inventory= (8,000)

Total purchase= 364,000 lbs

Total cost= 364,000*0.8= $291,200