Exercise 6-17 (book/static) Question Help Covered Manufacturing Company manufactures (Click the icon to view the additional blue rugs, using wool and dye as direct materials. One rug is budgeted to use 30 skeins of wool at a information.) cost of $2 per skein and 0.5 litres of dye at a cost There is no direct manufacturing labour cost for of $5 per litre. All other materials are indirect. At the dyeing. Covered budgets 56 direct manufacturing beginning of the year Covered has an inventory of labour-hours to weave a rug at a budgeted rate of 349,000 skeins of wool at a cost of $715,450 and $15 per hour. It budgets 0.15 machine-hours to 5,000 litres of dye at a cost of $24.850. Target dye each skein in the dyeing process ending inventory of wool and dye is zero. Covered (Click the icon to view the budgeted overhead uses the FIFO inventory cost flow method. costs.) Required Requirement 1. Prepare a direct material usage budget in both units and dollars. Begin with the physical units portion; then prepare the cost budget portion of the direct material usage budget Direct Material Usage Budget in Quantity and Dollars Material Wool Dye Physical Units Budget Direct materials required for skeins blue rugs L Total Data Table The following table presents the budgeted overhead costs for the dyeing and weaving cost pools: Dyeing (based on 450,000 MH) Weaving (based on 5,600,000 DMLH) 4,950,000 5.400,000 11,200,000 2,240,000 1,680,000 Variable costs Indirect materials Maintenance Utilities Fixed costs Indirect labour Depreciation Other 239,000 1,900,000 320,000 12,809,000 $ 1,300,000 52,000 2,380,000 18,852,000 Total budgeted costs Print Done Covered blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 100,000 blue rugs per year. The budgeted selling price is $2,000 each. There are no rugs in beginning inventory. Target ending inventory of rugs is also zero. Covered makes rugs by hand but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost poolsone for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labour-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH)