question archive Anticipated sales for Sale Ride ‘Tire Company were 36,000 passenger car tires and 16,000 truck tires
Anticipated sales for Sale Ride ‘Tire Company were 36,000 passenger car tires and 16,000 truck tires
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Anticipated sales for Sale Ride ‘Tire Company were 36,000 passenger car tires and 16,000 truck tires. Beginning and ending finished goods inventories for both products were negligible, and thus were omitted from the sales budget. Rubber and steel belts are used in producing passenger car and truck according to the following table:
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Passenger car |
truck |
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rubber |
30 lbs. per unit |
70 lbs. per unit |
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Steel belts |
6 lbs. per unit |
10 lbs. per unit |
The purchase prices of rubber and steel are $3.60 and $4.50 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 material purchases budget for safe Ride Tire Company for the year ended December 31, 2012.
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1 |
SAFE RIDE TIRE COMPANY |
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2 |
Direct Materials Purchases Budget |
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For the Year Ending December 31, 2012 |
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Rubber |
Steel Belts |
Total |
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Pounds required for production: |
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Passenger tires |
1,080,000 lbs.1 |
216,000 lbs.2 |
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Truck tires |
1,120,0003 |
160,0004 |
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Plus desired inventory, December 31, 2012 |
40,000 |
10,000 |
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Total |
2,240,000 lbs. |
386,000 lbs. |
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Less estimated inventory, January 1, 2012 |
46,000 |
8,000 |
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Total units purchased |
2,194,000 lbs. |
378,000 lbs. |
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Unit price |
× $3.60 |
× $4.50 |
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Total direct materials to be purchased |
$7,898,400 |
$1,701,000 |
$9,599,400 |
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1Rubber: 36,000 units × 30 lbs. per unit = 1,080,000 lbs. |
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2 Steel belts: 36,000 units × 6 lbs. per unit = 216,000 lbs. |
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3Rubber: 16,000 units × 70 lbs. per unit = 1,120,000 lbs. |
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4Steel belts: 16,000 units × 10 lbs. per unit = 160,000 lbs. |
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