Question

manufacturing company manufactures blue​ rugs, using wool and dye as direct materials. one rug is budgeted to use skeins of wool at a cost of per skein and gallons of dye at a cost of per gallon. all other materials are indirect. at the beginning of the year has an inventory of skeins of wool at a cost of and gallons of dye at a cost of . target ending inventory of wool and dye is zero. uses the fifo inventory cost flow method.

Answer 1

This question discusses how a manufacturing company budgets for direct materials and manages inventory using the FIFO method.

Step-by-step explanation:

The subject of this question is how a manufacturing company budgets for direct materials and manages inventory using the FIFO inventory cost flow method.

In this case, the company manufactures blue rugs using wool and dye as direct materials. They budget for the quantity of wool and dye needed per rug and the cost per unit. The company also manages inventory by maintaining a target ending inventory of zero for both wool and dye.

The company uses the FIFO method to track and value its inventory, which means that the oldest inventory is assumed to be used or sold first. This method ensures that the cost of goods sold reflects the cost of the oldest inventory in the company's records.

Answer 2

The manufacturing company uses the FIFO inventory cost flow method to calculate the cost of goods sold and ending inventory in the production of blue rugs.

Step-by-step explanation:

The subject of your question is Inventory Costing Methods in manufacturing. In this case, the manufacturing company uses the FIFO (First-In, First-Out) inventory cost flow method.

This means that the company assumes that the first skeins of wool and gallons of dye purchased are the first to be used in production and the first to be sold. The cost of these materials is used to determine the cost of goods sold and the value of ending inventory.

To calculate the cost of goods sold, the company will use the cost per skein of wool and the cost per gallon of dye for the first 1,000 rugs produced. For the ending inventory, the company will assume zero target ending inventory and calculate the cost of the remaining skeins of wool and gallons of dye in stock.