Direct Materials Purchases Budget 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. Safety Grip Company Direct Materials Purchases Budget For the Year Ending December 31, 20Y9 Rubber Steel Belts Total Pounds required for production: Passenger tires fill in the blank 1 lbs. fill in the blank 2 lbs. Truck tires fill in the blank 3 fill in the blank 4 Desired inventory, December 31, 20Y9 fill in the blank 6 fill in the blank 7 Total pounds available fill in the blank 8 lbs. fill in the blank 9 lbs. Estimated inventory, January 1, 20Y9 fill in the blank 11 fill in the blank 12 Total units purchased fill in the blank 13 lbs. fill in the blank 14 lbs. Unit price x $fill in the blank 15 x $fill in the blank 16 Total direct materials to be purchased $fill in the blank 17 $fill in the blank 18 $fill in the blank 19
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Direct Materials Purchases Budget
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.
| Safety Grip Company | |||
| Direct Materials Purchases Budget | |||
| For the Year Ending December 31, 20Y9 | |||
| Rubber | Steel Belts | Total | |
| Pounds required for production: | |||
| Passenger tires | fill in the blank 1 lbs. | fill in the blank 2 lbs. | |
| Truck tires | fill in the blank 3 | fill in the blank 4 | |
| Desired inventory, December 31, 20Y9 | fill in the blank 6 | fill in the blank 7 | |
| Total pounds available | fill in the blank 8 lbs. | fill in the blank 9 lbs. | |
| Estimated inventory, January 1, 20Y9 | fill in the blank 11 | fill in the blank 12 | |
| Total units purchased | fill in the blank 13 lbs. | fill in the blank 14 lbs. | |
| Unit price | x $fill in the blank 15 | x $fill in the blank 16 | |
| Total direct materials to be purchased | $fill in the blank 17 | $fill in the blank 18 | $fill in the blank 19 |
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