Question
Anticipated sales for Sure Grip Tire Company were 66,000 passenger car tires and 20,000 truck tires. Beginning and ending finished goods inventories for both products
Anticipated sales for Sure Grip Tire Company were 66,000 passenger car tires and 20,000 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 tires according to the following table:
Passenger Car | Truck | |
Rubber | 31 lbs. per unit | 72 lbs. per unit |
Steel belts | 6 lbs. per unit | 15 lbs. per unit |
The purchase prices of rubber and steel are $3.00 and $3.90 per pound, respectively. The desired ending inventories of rubber and steel belts are 62,000 and 13,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 73,000 and 11,000 pounds, respectively.
Prepare a direct materials purchases budget for Sure Grip Tire Company for the year ended December 31, 2012.
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