E6-27 (similar to) Xavier Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 36 skeins of wool at a cost of $2 per skein and 0.8 gallons of dye at a cost of $6 per gallon. All other materials are indirect. At the beginning of the year Xavier has an inventory of 458,000 skeins of wool at a cost of $961,800 and 4,000 gallons of dye at a cost of $23,680. Target ending inventory of wool and dye is zero. Xavier uses the FIFO inventory cost flow method. Data Table The following table presents the budgeted overhead costs for the dyeing and weaving cost pools Variable costs Indirect materials $ Maintenance - X Dyeing Weaving (based on 1,440,000 MH) (based on 12,400,000 DMLH) 0 $ 6,560,000 7,550,000 15,400,000 5,540,000 2,270,000 Utilities Fixed costs Indirect labor 347,000 1,700,000 Depreciation 2,100,000 274,000 Other 723,000 5,816,000 Total budgeted costs 17,280,000 $ 31,000,000