Xiao Manufacturing Company manufactures blue rugs using wool and dye as direct materials. One rug is budgeted to use 36 skeins of wool at a cost of $3 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, Xiao has an inventory of 448,000 skeins of wool at a cost of $985,600 and 3,800 gallons of dye at a cost of $21,660. 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 60 direct manufacturing labor-hours to weave a rug at a budgeted rate of $13 per hour. (Click the icon to view the budgeted overhead costs.) Read the requirements 1 More Info Xiao 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. Xiao 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) $ 0 $ 6,555,000 7,555,000 15,390,000 5,520,000 2,035,000 Variable costs Indirect materials Maintenance Utilities Fixed costs Indirect labor Depreciation Other Total budgeted costs 352,000 2,163,000 718,000 17,343,000 $ 1,720,000 265,000 5,820,000 30,750,000 Print Done Xiao Manufacturing Company manufactures blue rugs using wool and dye as direct materials. One rug is budgeted to use 36 skeins of wool at a cost of $3 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, Xiao has an inventory of 448,000 skeins of wool at a cost of $985,600 and 3,800 gallons of dye at a cost of $21,660. 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 60 direct manufacturing labor-hours to weave a rug at a budgeted rate of $13 per hour. (Click the icon to view the budgeted overhead costs.) Read the requirements 1 More Info Xiao 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. Xiao 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) $ 0 $ 6,555,000 7,555,000 15,390,000 5,520,000 2,035,000 Variable costs Indirect materials Maintenance Utilities Fixed costs Indirect labor Depreciation Other Total budgeted costs 352,000 2,163,000 718,000 17,343,000 $ 1,720,000 265,000 5,820,000 30,750,000 Print Done
