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:
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and 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 | |
| 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. | |
| 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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