Question 5 (10 marks) Xerxes 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 Xerxes 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. Xerxes uses the FIFO inventory cost flow method. Xerxes blue rugs are very popular and demand is high, but because of capacity constraints the fir will produce only 200,000 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. Xerxes 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. Xerxes budgets 62 direct manufacturing labor hours to weave a rug at a budgeted rate of $13 per hour. It budgets 0.2 machine-hours to dye cach skein in the dyeing process. The following table presents the budgeted overhead costs for the dyeing and weaving cost pools: Dyeing Weaving (based on 1,440,000 MH) (based on 12,400,000 DMLH) Variable costs Indirect materials $15,400,000 Maintenance 6,560,000 5,540,000 Utilities 7,550,000 2,890,000 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 $31,620,000 $ 0 Required: Prepare a direct material usage budget by filling the blanks in the table below (you may use both units and dollars in budget). Wool Dye Total Physical units budget Direct materiais required for blue rugs (200,000 rugs x 36 skeins and 0.8 gal.) Cost budget Available from beginning direct materials inventory wool: 458,000skeins dye: 4,000 gal. To be purchased this period wool: dye: Direct materials to be used this period