Xin Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 43 skeins of wool at a cost of $6 per skein and 0.8 gallons of dye at a cost of $5 per gallon. All other materials are indirect. At the beginning of the year Xin has an inventory of 454,000 skeins of wool at a cost of $998,800 and 3,500 gallons of dye at a cost of $22,050. Target ending inventory of wool and dye is zero. Xin uses the FIFO inventory cost flow method. (Click the icon to view the additional information.) There is no direct manufacturing labor cost for dyeing. Xin budgets 40 direct manufacturing labor-hours to weave a rug at a budgeted rate of $16 per hour. It budgets 0.2 machine-hours to dye each skein in the dyeing process. 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. Total Direct Material Usage Budget in Quantity and Dollars Material Wool Dye Physical Units Budget Direct materials required for 10,965,000 204.000 Blue rugs skeins gal Cost Budget Available from beginning direct materials inventory (under a FIFO cost-flow assumption) Wool $ 998.800 Dye $ 22.050 To be purchased this period Wool 63,066,000 1.002.500 Dye $ 64,064.800 $ 1,024.550 Direct materials to be used this period $ 65,089,350 Requirement 2. Calculate the budgeted overhead allocation rates for weaving and dyeing Begin by determining the formula, then calculate the budgeted overhead allocation rate for weaving. (Round your answer to the nearest cent.) Total budgeted overhead costs 1 Direct manuf. labor hours Budgeted manufacturing overhead rate $ 31,620,000 1 10.200.000 = $ 3.10 Begin by determining the formula, then calculate the budgeted overhead allocation rate for dyeing. (Round your answer to the nearest cent.) Total budgeted overhead costs Machine hours Budgeted manufacturing overhead rate $ 17,544,000 2,193,000 = $ 8 Requirement 3. Calculate the budgeted unit cost of a blue rug for the year. (Round your answers to two decimal places.) Cost per unit of input Input per unit of output 43 0.80 Budgeted unit cost 258.00 Wool 6 x X $ 5 X 4.00 16 X 40 640.00 Dye Direct manufacturing labor Dyeing overhead Weaving overhead Total 8 x 8.60 68.80 3.10 x 124.00 40 $ 1,094.80 Requirement 4. Prepare a revenue budget for blue rugs for the year, assuming Xin sells (a) 255,000 or (b) 240,000 blue rugs (that is, at two different sales levels). Revenue Budget Units Selling price Total revenues 255,000 $ 2,300 $ 586,500,000 240,000 2.300 552,000,000 (a) Blue rugs (b) Blue rugs Requirement 5. Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) Begin by (a) completing the cost of goods sold budget assuming sales of 255,000 rugs, and then (b) complete a cost of goods sold budget assuming sales of 240,000 rugs. Cost of Goods Sold Budget (a) 255,000 units Beginning finished goods inventory Direct materials used Direct manufacturing labor Manufacturing overhead Cost of goods manufactured Cost of goods available for sale Deduct ending finished goods inventory Cost of goods sold Data table - l More info The following table presents the budgeted overhead costs for the dyeing and weaving cost pools: Xin blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 255,000 blue rugs per year. The budgeted selling price is $2,300 each. There are no rugs in beginning inventory. Target ending inventory of rugs is also zero. Xin makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost poolsone for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labor-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH). Dyeing (based on 2,193,000 MH) Weaving (based on 10,200,000 DMLH) sa Variable costs Indirect materials $ 0 $ 15,480,000 Maintenance 5,535,000 6,580,000 7.585,000 Utilities 2.710.000 Print Done Fixed costs Indirect labor 1,750.000 to Depreciation 382,000 2,249,000 748,000 280.000 5,865,000 Other ng the cost of goods sold budget assuming sales of 255,000 rugs, and then (b) complete a cost of goods sold budget assuming sa Cost of Goods Sold Budget (a) 255,000 units $ 17,544,000 $ 31,620,000 Total budgeted costs ods inventory labor Print Done ad Requirements 4. 1. Prepare a direct material usage budget in both units and dollars. 2. Calculate the budgeted overhead allocation rates for weaving and dyeing. 3. Calculate the budgeted unit cost of a blue rug for the year. Prepare a revenues budget for blue rugs for the year, assuming Xin sells (a) 255,000 or (b) 240,000 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 240,000 blue rugs? 8. How might top management at Xin use the budget developed in requirements 1-6 to better manage the company