Xander Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 38 skeins of wool at a cost of $4 per skein and 0.7 gallons of dye at a cost of $7 per gallon. All other materials are indirect At the beginning of the year Xander has an inventory of 450,000 skeins of wool at a cost of $855,000 and 3,700 gallons of dye at a cost of $21,830. Target ending inventory of wool and dye is zero. Xander uses the FIFO inventory cost flow method. (Click the icon to view the additional information.) There is no direct manufacturing labor cost for dyeing. Xander budgets 52 direct manufacturing labor-hours to weave a rug at a budgeted rate of $14 per hour. It budgets 0.3 machine-hours to dye each skein in the dyeing process. EB (Click the icon to view the budgeted overhead costs.) More Info Xander blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 225,000 blue rugs per year. The budgeted selling price is $2,100 each. There are no rugs in beginning inventory. Target ending inventory of rugs is also zero. Xander 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)