Calculate the budgeted unit cost of a blue rug for the year

Assignment Help Accounting Basics

Reference no: EM133644113

Assignment: Accounting

Budgeting; direct material usage, manufacturing cost, and gross margin. Xander 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 $2 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 Xander has an inventory of 458,000 skeins of wool at a cost of $961,800 and 4,000 gallons of dye at a cost of $23,680. Target ending inventory of wool and dye is zero.

Xander uses the FIFO inventory cost flow method. Xander blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 200,000 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. Xander makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost pools-one for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labour-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH). There is no direct manufacturing labour cost for dyeing. Xander budgets 62 direct manufacturing labour-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. The following table presents the budgeted overhead costs for the dyeing and weaving cost pools:

BackThe table is as follows

Parameter Dyeing, based on 1,440,000 M H Weaving, based on 12,400,000 D M L H Variable costs blank Blank Indirect materials $ 0 $15,400,000 Maintenance 6,560,000 5,540,000 Utilities 7,550,000 2,890,000 Fixed costs blank blank Indirect labor 347,000 1,700,000 Depreciation 2,100,000 274,000 Other 723,000 5,816,000 Total budgeted costs 17,280,000 $31,620,000

Task

Question I. Prepare a direct materials usage budget in both units and dollars.

Question II. Calculate the budgeted overhead allocation rates for weaving and dyeing.

Question III. Calculate the budgeted unit cost of a blue rug for the year.

Question IV. Prepare a revenues budget for blue rugs for the year, assuming Xander sells (a) 200,000 or (b) 185,000 blue rugs (i.e., at two different sales levels).

Question V. Calculate the budgeted cost of goods sold for blue rugs under each sales assumption.

Question VI. Find the budgeted gross margin for blue rugs under each sales assumption.

Question VII. What actions might you take as a manager to improve profitability if sales drop to 185,000 blue rugs?

Question VIII. How might top management at Xander use the budget developed in requirements I-VI to better manage the company?

Reference no: EM133644113

Questions Cloud

Demonstrate beginning level of understanding of diversity : Demonstrate a beginning level of understanding of diversity. Demonstrate beginning level information competency and informatics

Identify country that consider for international business : Identify a country that you consider for international business expansion and research that country's culture and laws regarding sexual harassment in workplace.

Documentation to appropriate differentiated instruction : How do you/will you use observation and documentation to guide appropriate differentiated instruction?

Pregnant past protective antibodies onto their infant : Who receive two doses of a MRNA vaccine for Covid while pregnant past protective antibodies onto their infant?

Calculate the budgeted unit cost of a blue rug for the year : Calculate the budgeted overhead allocation rates for weaving and dyeing. Calculate the budgeted unit cost of a blue rug for the year.

Identify the concept of radioactive decay : Describe common applications of radioactive isotopes (nuclear medicine, radiometric/carbon dating, nuclear energy)

What problem is this bill trying to resolve : Which committee is responsible for this bill? What problem is this bill trying to resolve? What interests are at stake if the bill is passed or not passed?

Describe for your audience the nature of your chosen issue : Describe for your audience the nature of your chosen public health issue, so that they will be able to understand and appreciate your presentation.

Visual exam reveals red skin with several forming pustules : Visual exam reveals red skin with several forming pustules.

User Account

All Pages