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Because the market for wool yarn has remained strong, the sales manager thinks production of sweaters should be discontinu is upset about having to sell sweaters at a $2.50 loss when the yarn could be sold for a $6.00 profit. However, the production manager does not want to close a large portion of the factory. He argues the company is in the sweater business, not the yarn business, and should focus on its core strength. Manufacturing overhead is applied to products based on 150% of direct labor cost. However, the manufacturing overhead cos fixed and would not be affected even if sweaters were discontinued. Materials and direct labor costs are variable. Required: 1. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? 2. Would you recommend the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Would you recommend the wool yarn be sold outright or processed into sweaters? The Scottie Sweater Company produces sweaters under the "Scottie" label. The company buys raw wool and processes it into wool yarn from which the sweaters are woven. One spindle of wool yarn is required to produce one sweater. The market for sweaters is temporarily depressed due to unusually warm weather in the western states where the sweaters are sold. This has made it necessary for the company to discount the selling price of the sweaters to $32.00 from the normal $42.00 price. The company's cost system reports the profit per sweater as shown below: Originally, the company used all of its wool yarn to produce sweaters, but in recent years a market has developed for the wool yarn tself. Current cost and revenue data per spindle of yarn are given below: Because the market for wool yarn has remained strong, the sales manager thinks production of sweaters should be discontinued. She is upset about having to sell sweaters at a $2.50 loss when the yarn could be sold for a $6.00 profit. However, the production manager does not want to close a large portion of the factory. He argues the company is in the sweater business, not the yarn business, and should focus on its core strength. Manufacturing overhead is applied to products based on 150% of direct labor cost. However, the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Materials and direct labor costs are variable. Required: 1. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? 2. Would you recommend the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price the company should accept for a sweater? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? Note: Round your answer to 2 decimal places. Manufacturing overhead is applied to products based on 150% of direct labor cost. However, the manufacturing overhead fixed and would not be affected even if sweaters were discontinued. Materials and direct labor costs are variable. Required: 1. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? 2. Would you recommend the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price the company should accept for a sweater? Complete this question by entering your answers in the tabs below. What is the lowest price the company should accept for a sweater? Note: Round your answer to 2 decimal places. Because the market for wool yarn has remained strong, the sales manager thinks production of sweaters should be discontinu is upset about having to sell sweaters at a $2.50 loss when the yarn could be sold for a $6.00 profit. However, the production manager does not want to close a large portion of the factory. He argues the company is in the sweater business, not the yarn business, and should focus on its core strength. Manufacturing overhead is applied to products based on 150% of direct labor cost. However, the manufacturing overhead cos fixed and would not be affected even if sweaters were discontinued. Materials and direct labor costs are variable. Required: 1. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? 2. Would you recommend the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Would you recommend the wool yarn be sold outright or processed into sweaters? The Scottie Sweater Company produces sweaters under the "Scottie" label. The company buys raw wool and processes it into wool yarn from which the sweaters are woven. One spindle of wool yarn is required to produce one sweater. The market for sweaters is temporarily depressed due to unusually warm weather in the western states where the sweaters are sold. This has made it necessary for the company to discount the selling price of the sweaters to $32.00 from the normal $42.00 price. The company's cost system reports the profit per sweater as shown below: Originally, the company used all of its wool yarn to produce sweaters, but in recent years a market has developed for the wool yarn tself. Current cost and revenue data per spindle of yarn are given below: Because the market for wool yarn has remained strong, the sales manager thinks production of sweaters should be discontinued. She is upset about having to sell sweaters at a $2.50 loss when the yarn could be sold for a $6.00 profit. However, the production manager does not want to close a large portion of the factory. He argues the company is in the sweater business, not the yarn business, and should focus on its core strength. Manufacturing overhead is applied to products based on 150% of direct labor cost. However, the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Materials and direct labor costs are variable. Required: 1. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? 2. Would you recommend the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price the company should accept for a sweater? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? Note: Round your answer to 2 decimal places. Manufacturing overhead is applied to products based on 150% of direct labor cost. However, the manufacturing overhead fixed and would not be affected even if sweaters were discontinued. Materials and direct labor costs are variable. Required: 1. What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? 2. Would you recommend the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price the company should accept for a sweater? Complete this question by entering your answers in the tabs below. What is the lowest price the company should accept for a sweater? Note: Round your answer to 2 decimal places

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