Xander Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to click the icon to view the additional information.) 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 Xander has an inventory of 458,000 skeins of wool at a cost of 8961,800 and 4,000 There is no direct manufacturing labor cosi for dyeing, Xander budgets 62 direct manufacturing labor-hours to weave a gallons of dye at a cost of $23.680. Target ending inventory of wool and dye is zero. Xander uses the FIFO inventory rug at a budgeted rate of $13 per hour. It budgets 02 machine-hours to dye each skein in the dyeing process. cost flow method. (Click the icon to view the budgeted overhead costs.) Read the requirements - X i Data Table 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 The following table presents the budgeled overhead costs for the dyeing and weaving cost pools: Wool Dye Total Physical Units Budget Direct materials required for Dyeing (based on 1,440,000 MH) Weaving (based on 12,400,000 DMLH) Blue rugs skeins gal $ OS 6,560,000 7.550,000 15,400,000 5,540,000 2,890,000 Variable costs Indirect materials Maintenance Utilities Fixed costs Indirect labor Depreciation Other i More Info - X 347,000 2.100,000 723,000 1,700,000 274,000 5,816,000 $ 17.280.000 $ Total budgeted costs 31,620,000 Xander blue rugs are very popular and demand is high, but because of capacity constraints the firm 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. Xander makes rugs by hard, but uses a machine to dye the wool. Thus, overhead posts 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). Print Done Print Done - X i Requirements 1. 2. 3. 4. 5. 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 Xander sells (a) 200,000 or (b) 185,000 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 185,000 blue rugs? How might top management at Xander use the budget developed in requirements 1-6 to better manage the company? 6. 7. 8. Print Done