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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

image text in transcribedimage text in transcribedimage text in transcribed 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. Xiao budgets 50 direct 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 ! The following table presents the budgeted overhead costs for the dyeing and weaving cost pools: Xiao blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 240,000 blue rugs per year. The budgeted selling price is $2,400 each. There are no rugs in beginning inventory. Target ending inventory of rugs is also zero. Xiao makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost pools -one 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)

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