*Please complete only requirements 5 to 8*

Xuan 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 S3 per skein and 0.80 gallons of dye at a cost of $6 per gallon. All other materials are indirect. At the beginning of the year Xuan has an inventory of 448,000 skeins of wool at a cost of $985,600 and 3,800 gallons of dye at a cost of $21,660. Target ending inventory of wool and dye is zero. Xuan uses the FIFO inventory cost flow method. Addltlonal Info: Xuan blue rugs are very popular and demand is high, but because of capacity constraints the firm wil produce only 205,000 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 Xuan makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost pools-one for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labor-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH) There is no direct manufacturing labor cost for dyeing. Xuan budgets 60 direct manufacturing labor-hours to weave a rug at a budgeted rate of $13 per hour. It budgets 0.2 machine-hours to dye each skein in the dyeing process. Requirements: 1. Prepare a direct material usage budget in both units and dollars 2. Calculate the budgeted overhead allocation rates for weaving and dyeing. 3. Calculate the budgeted unit cost of a blue rug for the year. 4. Prepare a revenues budget for blue rugs for the year, assuming Xuan sells (a) 205,000 or (b) 195,000 blue rugs (that is, at two different sales levels). Calculate the budgeted cost of goods sold for blue rugs under each sales assumption Find the budgeted gross margin for blue rugs under each sales assumption. What actions might you take as a manager to improve profitability if sales drop to 195,000 blue rugs? 6. 6. 7. 8. How might top management at Xuan use the budget developed in requirements 1-6 to better manage the company