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Problem - Direct Materials Purchases Budget - Anticipated sales for Safe 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 tires according to the following table:
Passenger Car
Truck
Rubber
30 lbs. per unit
70 lbs. per unit
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.
Required - Prepare a direct materials purchases budget for Safe Ride Tire Company for the year ended December 31, 2012.
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