Xin Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 40 skeins of wool at a cost of $5 per skein and 0.75 gallons of dye at a cost of $8 per gallon. All other materials are indirect. At the beginning of the year Xin has an inventory of 452,000 skeins of wool at a cost of $949,200 and 3,600 gallons of dye at a cost of $22,320. Target ending inventory of wool and dye is zero. Xin uses the FIFO inventory cost flow method (Click the icon to view the additional information.) There is no direct manufacturing labor cost for dyeing. Xin budgets 48 direct manufacturing labor hours to weave a rugat a budgeted rate of $15 per hour budgets 0.25 machine-hours to dye each skin in the dyeing process (Click the icon to view the budgeted overhead costs) Read the requirements 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 Physical Units Budget Direct materials required for Dye Total Blue rugs skeins 1. 4. Prepare a direct material usage budget in both units and dollars. Calculate the budgeted overhead allocation rates for weaving and dyeing. Calculate the budgeted unit cost of a blue rug for the year. Prepare a revenues budget for blue rugs for the year, assuming Xin sells (a) 250,000 or (b) 225,000 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 225,000 blue rugs? How might top management at Xin use the budget developed in requirements 1-6 to better manage the company? 7. Xin blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 250,000 blue rugs per year. The budgeted selling price is $2,200 each. There are no rugs in beginning inventory. Target ending inventory of rugs is also zero. Xin makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost pools-one for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labor-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH). Dyeing (based on 2,500,000 MH) Weaving (based on 12,000,000 DMLH) Variable costs Indirect materials Maintenance 0$ 6,570,000 7,575,000 15,450,000 5,530,000 2,365,000 Utilities Fixed costs 372,000 Indirect labor Depreciation 2,245,000 738,000 1,740,000 275,000 5,840,000 31,200,000 Other 17,500,000 $ Total budgeted costs