{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-06T10:41:25-04:00", "answer_date": "2024-06-06 10:41:25", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "2359852", "url": "\/study-help\/questions\/originally-all-of-the-wool-yarn-was-used-to-produce-2359852", "question_creation_date_js": "2024-06-06T10:41:25-04:00", "question_creation_date": "Jun 06, 2024 10:41 AM", "meta_title": "[Solved] Originally, all of the wool yarn was used | SolutionInn", "meta_description": "Answer of - Originally, all of the wool yarn was used to produce sweaters, but in recent years a market has developed for the wool | SolutionInn", "meta_keywords": "originally,wool,yarn,produce,sweaters,recent,years,market,developed,purchased,companies,production", "question_title_h1": "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", "question_title": "Originally, all of the wool yarn was used to produce sweaters, but", "question_title_for_js_snippet": "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 Selling price Cost to manufacture Raw materials (raw wool) Direct labor Manufacturing overhead Manufacturing profit Per Spindle of Yarn $ 20 00 $ 7 00 3 60 5 40 16 00 $4 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 $30 from the normal $40 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 50 loss when the yarn could be sold for a $4 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", "question_description": "\"image 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: Selling price Cost to manufacture: Raw materials (raw wool) Direct labor Manufacturing overhead Manufacturing profit Per Spindle of Yarn $ 20.00 $ 7.00 3.60 5.40 16.00 $4.00 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 $30 from the normal $40 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 $2.50 loss when the yarn could be sold for a $4.00 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", "transcribed_text": "", "related_book": { "title": "Managerial Accounting", "isbn": "1259307417, 978-1260153132, 1260153134, 978-1259307416", "edition": "16th edition", "authors": "Ray Garrison, Eric Noreen, Peter Brewer", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/1290.jpg", "uri": "\/textbooks\/managerial-accounting-16th-edition-1290", "see_more_uri": "\/textbooks\/business-trading-3391" }, "free_related_book": { "isbn": "1785926438", "uri": "\/textbooks\/cultural-humility-in-art-therapy-1st-edition-978-1785926433-340331", "name": "Cultural Humility In Art Therapy", "edition": "1st Edition" }, "question_posted": "2024-06-06 10:41:25", "see_more_questions_link": "\/study-help\/questions\/business-general-management-2023-February-20", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/consider-all-the-data-stores-shown-in-figure-draw-an", "description": "Consider all the data stores shown in Figure. 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