The Scottie Sweater Company produces sweaters under the Scottie label. The company buys raw wool and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 costs and revenues associated with the sweaters are given below: Selling price Cost to manufacture: Raw materials: Per Sweater $ 44.00 Buttons, thread, lining $ 2.00 Wool yarn 22.00 Total raw materials 24.00 Direct labor Manufacturing overhead Manufacturing profit (loss) 8.80 13.20 46.00 $ (2.00) Originally, all of the wool yarn was used to produce sweaters, but in recent years a market has developed for the wool yarn itself. The yarn is purchased by other companies for use in production of wool blankets and other wool products. Since the development of the market for the wool yarn, a continuing dispute has existed in the Scottie Sweater Company as to whether the yarn should be sold simply as yarn or processed into sweaters. Current cost and revenue data on the yarn are given below: Per Spindle of Yarn $ 31.00 Selling price Cost to manufacture: Raw materials (raw wool) Direct labor Manufacturing overhead Manufacturing profit $ 13.00 3.60 5.40 22.00 $ 9.00 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. All of the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. 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 that the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price that the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? (Round your answer to 2 decimal places.) < Required 1 Required 2 > 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. All of the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. 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 that the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price that the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Would you recommend that the wool yarn be sold outright or processed into sweaters? Sold outright Processed into sweaters < Required 1 Required 3 > 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. All of the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. 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 that the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price that the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the lowest price that the company should accept for a sweater? (Round your answer to 2 decimal places.) Lowest price < Required 2 Required 3> 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 costs and revenues associated with the sweaters are given below: Selling price Cost to manufacture: Raw materials: Per Sweater $ 44.00 Buttons, thread, lining $ 2.00 Wool yarn 22.00 Total raw materials 24.00 Direct labor Manufacturing overhead Manufacturing profit (loss) 8.80 13.20 46.00 $ (2.00) Originally, all of the wool yarn was used to produce sweaters, but in recent years a market has developed for the wool yarn itself. The yarn is purchased by other companies for use in production of wool blankets and other wool products. Since the development of the market for the wool yarn, a continuing dispute has existed in the Scottie Sweater Company as to whether the yarn should be sold simply as yarn or processed into sweaters. Current cost and revenue data on the yarn are given below: Per Spindle of Yarn $ 31.00 Selling price Cost to manufacture: Raw materials (raw wool) Direct labor Manufacturing overhead Manufacturing profit $ 13.00 3.60 5.40 22.00 $ 9.00 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. All of the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. 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 that the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price that the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the financial advantage (disadvantage) of further processing one spindle of wool yarn into a sweater? (Round your answer to 2 decimal places.) < Required 1 Required 2 > 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. All of the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. 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 that the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price that the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Would you recommend that the wool yarn be sold outright or processed into sweaters? Sold outright Processed into sweaters < Required 1 Required 3 > 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 $44.00 from the normal $54.00 price. Since the market for wool yarn has remained strong, the dispute has again surfaced over whether the yarn should be sold outright rather than processed into sweaters. The sales manager thinks that the production of sweaters should be discontinued; she is upset about having to sell sweaters at a $2.00 loss when the yarn could be sold for a $9.00 profit. However, the production superintendent does not want to close down a large portion of the factory. He argues that the company is in the sweater business, not the yarn business, and the company should focus on its core strength. All of the manufacturing overhead costs are fixed and would not be affected even if sweaters were discontinued. Manufacturing overhead is assigned to products on the basis of 150% of direct labor cost. 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 that the wool yarn be sold outright or processed into sweaters? 3. What is the lowest price that the company should accept for a sweater? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the lowest price that the company should accept for a sweater? (Round your answer to 2 decimal places.) Lowest price < Required 2 Required 3>
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Jane Doe is single and claims 2 withholding allowances. If her weekly gross earning is $1,450, then determine the Federal Withholding Tax.
-
The participants of such recreational activities as hang gliding, soaring, hiking, rock collecting, or skydiving often create local birds-of-a-feather (affinity) organizations. Two examples are the...
-
Some people are good drivers, and others are bad drivers. The former have a 10% chance of crashing their cars, and the latter have a 30% chance. All have a total wealth of 400, but this will fall to...
-
The comparative financial statements for CyberOptic Corporation are in the Working Papers. The financial statements have been completed up to the comparative analysis section. Instructions: 1....
-
Hannoon, a Kuwaiti employee who worked as an information systems manager, requested Friday afternoons off to observe weekly Muslim prayer services. His supervisor noted in his personnel file, first...
-
Identify and explain the major audit risk areas, business risk areas and how the audit risk is addressed for AfterPay.
-
Think about several companies with whom you'd like to develop a partnership. For each company, complete the worksheet. You might not be able to answer all, or most, of the questions immediately, but...
-
You are constructing a box for your cat to sleep in. The plush material for the square bottom of the box costs 5 dollars per square foot and the material for the sides costs 3 dollars per square...
-
Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no Inventories. The following information is available for the current month: Actual...
-
Think of a workplace situation in which you need to communicate difficult information to a co- worker/teammate. Write a description of this scenario. Your description should include only information...
-
(8) An amount of $280,000 owed to the company and written off in 2013 was recovered in April 2014. In April 2014 the company spent $500,000 servicing its fleet of motor vehicles. This amount was not...
-
f(x,y)=2xy-1/2(x^4-y^4)+1 Find all the critical points of f(x,y). After finding them, can you give the function value at each critical point.
-
A) Bloomberg Company is considering an investment project in Canada which has an initial cost of CAD6,120,000. The project is expected to return a one-time payment of CAD9,140,000 three years from...
-
The comparative statements of financial position of Menachem NV at the beginning and end of the year 2019 appear below. Net income of ¬34,000 was reported, and dividends of ¬23,000 were paid...
-
Let \(\mathscr{T}=\left\{\boldsymbol{X}_{1}, \ldots, \boldsymbol{X}_{n} ight\}\) be iid data from a pdf \(g(\boldsymbol{x} \mid \boldsymbol{\theta})\) with Fisher matrix...
-
Simulate an iid training set of size 100 from the Gamma \((2.3,0.5)\) distribution, and implement the Fisher scoring method in Example 4. 1 to find the maximum likelihood estimate. Plot the true and...
-
Figure 4. 15 shows a Gaussian KDE with bandwidth \(\sigma=0.2\) on the points \(-0.5,0,0.2,0.9\), and 1. 5. Reproduce the plot in Python. Using the same bandwidth, plot also the KDE for the same...
Study smarter with the SolutionInn App