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
