Xavier 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 38 skeins of wool at a cost of $3 per skein and 0.8 gallons of dye at a cost of $8 per gallon. All other materials are indirect. At the beginning of the year, Xavier has an inventory of 448,000 skeins of wool at a cost of $985,600 and 3,800 It budgets 0.2 machine-hours to dye each skein in the dyeing process. There is no direct manufacturing labor cost for gallons of dye at a cost of $21,660. Target ending inventory of wool and dye is zero. Xavier uses the FIFO inventory cost dyeing, Xavier budgets 60 direct manufacturing labor hours to weave a rug at a budgeted rate of $13 per hour. flow method (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 Dye Total Physical Units Budget Direct materials required for Bluo rugs skeins gal Enter any number in the edit fields and then click Check Answer ? 1 parts Clear All Check Answer i X More Info Xavier blue rugs are very popular and demand is high, but because of capacity constraints the firm will 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. Xavier makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost poolsone for dyeing and the other for weaving. Dyeing overhead is allocated to products based on machine-hours (MH). Weaving overhead is allocated to products based on direct manufacturing labor-hours (DMLH). Print Done Data Table The following table presents the budgeted overhead costs for the dyeing and weaving cost pools: Dyeing (based on 1,476,000 MH) Weaving (based on 12,300,000 DMLH) Variable costs ct materials $ 0 $ 15,390,000 Maintenance 6,555,000 5,520,000 7,555,000 2,035,000 Utilities Fixed costs Indirect labor 352,000 1,720,000 Depreciation 2,163,000 718,000 265,000 5,820,000 Other $ 17,343,000 $ 30,750,000 Total budgeted costs Print Done 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 dyeing and weaving. Calculate the budgeted unit cost of a blue rug for the year. Prepare a revenues budget for blue rugs for the year, assuming Xavier 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 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? How might top management at Xavier use the budget developed in requirements 1-6 to better manage the company? 7. 8. Print Done