Direct Materials Purchases Budget Anticipated sales for Solid Grip Company were 38,000 passenger car tires and 24,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows: Passenger Car Truck Rubber 36 lb. per unit 80 lb. per unit Steel belts 6 lb. per unit 10 lb. per unit The purchase prices of rubber and steel are $1.40 and $0.90 per pound, respectively. The desired ending inventories of rubber and steel belts are 35,000 and 12,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 40,000 and 10,000 pounds, respectively. Prepare a direct materials purchases budget for Solid Grip Company for the year ended December 31, 20Y8. When required, enter unit prices to the nearest cent. Solid Grip CompanyDirect Materials Purchases BudgetFor the Year Ending December 31, 20Y8 Rubber Steel Belts Total Pounds required for production: Passenger tires fill in the blank __lb. fill in the blank __lb. Truck tires Plus desired inventory, December 31, 20Y8 Total pounds required fill in the blank ___lb. fill in the blank ___lb. Less estimated inventory, January 1, 20Y8 Total pounds to be purchased fill in the blank ___lb. fill in the blank ___lb. Unit price x $ x $ Total direct materials to be purchased $ $ $
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 Solid Grip Company were 38,000 passenger car tires and 24,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows:
| Passenger Car | Truck | |
| Rubber | 36 lb. per unit | 80 lb. per unit |
| Steel belts | 6 lb. per unit | 10 lb. per unit |
The purchase prices of rubber and steel are $1.40 and $0.90 per pound, respectively. The desired ending inventories of rubber and steel belts are 35,000 and 12,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 40,000 and 10,000 pounds, respectively.
Prepare a direct materials purchases budget for Solid Grip Company for the year ended December 31, 20Y8. When required, enter unit prices to the nearest cent.
| Rubber | Steel Belts | Total | |
| Pounds required for production: | |||
| Passenger tires | fill in the blank __lb. | fill in the blank __lb. | |
| Truck tires | |||
|
Plus desired inventory, December 31, 20Y8
|
|||
| Total pounds required | fill in the blank ___lb. | fill in the blank ___lb. | |
|
Less estimated inventory, January 1, 20Y8
|
|||
| Total pounds to be purchased | fill in the blank ___lb. | fill in the blank ___lb. | |
| Unit price | x $ | x $ | |
| Total direct materials to be purchased | $ | $ | $ |
Total direct material to be purchased = Total pounds to be purchased * Unit Price
Total pounds to be purchased = Total Pounds required for production + Ending Inventory - Beginning Inventory
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