Xerxes Manufacturing Company

2. (1)

Direct Material Usage Budget in Quantity and Dollars |

| | Materials | |

| | Wool | Dye | Total |

Physical Units Budget | | | | |

Direct materials required for blue rugs(200,000) rugs x 36 skeins and 0.8 gal.) | | 7,200,000 skeins | 160,000 gal. | |

Cost Budget | | | | |

Beginning direct material inventory :(a) | | | | |

Wool: 458,000 skeins | | $961,000 | | |

Dye: 4,000 gallons | | | $23,680 | |

To be purchased this period: (b) | | | | |

Wool: (7,200,000 – 458,000) skeins x $2 per skein | | $13,484,00 | | |

Dye: (160,000 – 4,000) gal. x $6 per gal | | | $936,000 | |

| | $14,445,80 | | |

Direct Materials to be used this period: (a) + (b) | | 0 | $959,680 | $15,405,480 |

2. (2)

Weaving budgeted overhead rate = $31,620,000/12,400,000 DMLH

= $2.55 per DMLH

Dyeing budgeted over head rate = $17,280,000/1,440,000 MH

= $12 per MH

2. (3)

Budgeted Unit Cost of Blue Rug

| Cost per Unit of Input($) | Input per Unit of Output | Total($) |

Wool | 2 | 36 skeins | 72 |

Dye | 6 | 0.8 gal | 4.80 |

Direct Manufacturing Labor | 13 | 62 hours | 806.00 |

Dyeing Overhead | 12 | 7.2 machine hours | 86.40 |

Weaving Overhead | 2.55 | 62 DMLH | 158.10 |

Total | | | $1127.30 |

0.2 machine hours per skein

36 skeins per rug

36 x 0.2 = 7.2 machine hours per rug.

2. (4)

Revenue Budget |

| Units | Selling Price | Total Revenues |

Blue Rugs | 200,000 | $2,000 | $400,000,000 |

Blue Rugs | 185,000 | $2,000 | $370,000,000 |

2. (5a)

Sales = 200,000 rugs

Cost of Goods Sold Budget

| From Schedule ($) | Total ($) |

Beginning finished goods inventory | | 0 |

Direct Materials Used | 15,405,480 | |

Direct Manufacturing Labor ($806 x 200,000) | 161,200,000 | |

Dyeing Overhead ($86.40 x 200,000) | 17,280,000 |...