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: Originally, all of the wool yarn was used to produce sweaters, but in recent years a market has CE2veloped 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: 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 $33 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 loss when the yarn could be sold for a 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. Material and direct labor costs are variable. The President to the Scottie Sweater Company, Samantha Scottie, has hired your consulting firm to address these issues. Specifically, she wants to know whether the company should continue to manufacture sweaters or just sell the yarn. In addition, since the price of sweaters has been changing, is there a price they should consider stopping or continuing to sell sweaters? Be sure to address the following: O The financial advantage (disadvantage) of further processing one spindle of wool yam into a sweater. o The lowest price the company should accept for the sweater. Hints: If you recommend stop selling sweaters then your lowest price for sweaters must be higher than the current price. If you recommend continuing to sell sweaters your lowest price must be less than the current price. The company must produce the yarn to produce the sweater. This is not a decision of whether to produce yarn or sweaters, the decision is whether to process the yarn into sweaters or stop at the yarn