Xiao Manufacturing Company manufactures blue rugs using wool and dye as direct materials. One rug is budgeted to use 35 skeins of wool at a cost of $6 per skein and 0.8 gallons of dye at a cost of $10 per gallon. All other materials are indirect. At the beginning of the year, Xiao has an inventory of 466,000 skeins of wool at a cost of $1,165,000 and 4,400 gallons of dye at a cost of $27,280. Target ending inventory of wool and dye is zero. Xiao uses the FIFO inventory cost flow method. (Click the icon to view the additional information.) It budgets 0.2 machine-hours to dye each skein in the dyeing process. There is no direct manufacturing labor cost for dyeing. Xiaobudgets 50direct manufacturing labor-hours to weave a rug at a budgeted rate of $17 per hour. (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 1. Prepare a direct material usage budget in both units and dollars. 2. Calculate the budgeted overhead allocation rates for dyeing and weaving. 3. Calculate the budgeted unit cost of a blue rug for the year. 4. Prepare a revenues budget for blue rugs for the year, assuming Xiao sells (a) 240,000 or (b) 205,000 blue rugs (that is, at two different sales levels). 5. Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. 6. Find the budgeted gross margin for blue rugs under each sales assumption. 7. What actions might you take as a manager to improve profitability if sales drop to 205,000 blue rugs? 8. How might top management at Xiao use the budget developed in requirements 1-6 better manage the company? Xiao Manufacturing Company manufactures blue rugs using wool and dye as direct materials. One rug is budgeted to use 35 skeins of wool at a cost of $6 per skein and 0.8 gallons of dye at a cost of $10 per gallon. All other materials are indirect. At the beginning of the year, Xiao has an inventory of 466,000 skeins of wool at a cost of $1,165,000 and 4,400 gallons of dye at a cost of $27,280. Target ending inventory of wool and dye is zero. Xiao uses the FIFO inventory cost flow method. (Click the icon to view the additional information.) It budgets 0.2 machine-hours to dye each skein in the dyeing process. There is no direct manufacturing labor cost for dyeing. Xiaobudgets 50direct manufacturing labor-hours to weave a rug at a budgeted rate of $17 per hour. (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 1. Prepare a direct material usage budget in both units and dollars. 2. Calculate the budgeted overhead allocation rates for dyeing and weaving. 3. Calculate the budgeted unit cost of a blue rug for the year. 4. Prepare a revenues budget for blue rugs for the year, assuming Xiao sells (a) 240,000 or (b) 205,000 blue rugs (that is, at two different sales levels). 5. Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. 6. Find the budgeted gross margin for blue rugs under each sales assumption. 7. What actions might you take as a manager to improve profitability if sales drop to 205,000 blue rugs? 8. How might top management at Xiao use the budget developed in requirements 1-6 better manage the company