Xiao Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 40 skeins of wool at a cost of $4 per skein and 0.75 gallons of dye at a cost of $8 per gallon. All other materials are indirect. At the beginning of the year Xiao has an inventory of 462,000 skeins of wool at a cost of $1,062,600 and 4,200 gallons of dye at a cost of $25,200. Target ending inventory of wool and dye is zero. Xiao uses the FIFO inventory cost flow method