Xin 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 Xin 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. Xin uses the FIFO inventory cost flow method. 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 Material Wool Dye Total Physical Units Budget Direct materials required for (Click the icon to view the additional information.) There is no direct manufacturing labor cost for dyeing. Xin budgets 60 direct manufacturing labor-hours to weave a rug at a budgeted rate of $13 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. get Total A D K 5:00 PM 4/1/2020 28 Data Table Dyeing (based on 1,476,000 MH) Weaving (based on 12,300,000 DMLH) Variable costs Indirect materials Maintenance 0 $ 6,555,000 7,555,000 15,390,000 5,520,000 2,035,000 Utilities Fixed costs Indirect labor Depreciation 352,000 2,163,000 718,000 1,720,000 265,000 5,820,000 Other Total budgeted costs 17,343,000 $ 30,750,000 Uncle * Requirements facty to u oth a co szer 1. 2. 3. ent Prepare a direct material usage budget in both units and dollars. Calculate the budgeted overhead allocation rates for weaving and dyeing. 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) 205,000 or (b) 195,000 blue rugs (that is, at two different sales levels). Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. Find the budgeted gross margin for blue rugs under each sales assumption. What actions might you take as a manager to improve profitability if sales drop to 195,000 blue rugs? How might top management at Xin use the budget developed in requirements 1-6 to better manage the company? the 6. 7. 8. Print Done rid were to search Xin 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 Xin 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. Xin uses the FIFO inventory cost flow method. 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 Material Wool Dye Total Physical Units Budget Direct materials required for (Click the icon to view the additional information.) There is no direct manufacturing labor cost for dyeing. Xin budgets 60 direct manufacturing labor-hours to weave a rug at a budgeted rate of $13 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. get Total A D K 5:00 PM 4/1/2020 28 Data Table Dyeing (based on 1,476,000 MH) Weaving (based on 12,300,000 DMLH) Variable costs Indirect materials Maintenance 0 $ 6,555,000 7,555,000 15,390,000 5,520,000 2,035,000 Utilities Fixed costs Indirect labor Depreciation 352,000 2,163,000 718,000 1,720,000 265,000 5,820,000 Other Total budgeted costs 17,343,000 $ 30,750,000 Uncle * Requirements facty to u oth a co szer 1. 2. 3. ent Prepare a direct material usage budget in both units and dollars. Calculate the budgeted overhead allocation rates for weaving and dyeing. 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) 205,000 or (b) 195,000 blue rugs (that is, at two different sales levels). Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. Find the budgeted gross margin for blue rugs under each sales assumption. What actions might you take as a manager to improve profitability if sales drop to 195,000 blue rugs? How might top management at Xin use the budget developed in requirements 1-6 to better manage the company? the 6. 7. 8. Print Done rid were to search
