Question

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: per sweater selling price $ 35.00 cost to manufacture: raw materials: buttons, thread, lining $ 2.00 wool yarn 19.00 total raw materials 21.00 direct labor 7.20 manufacturing overhead 10.80 39.00 manufacturing profit (loss) $ (4.00) 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 selling price $ 22.00 cost to manufacture: raw materials (raw wool) $ 10.00 direct labor 3.60 manufacturing overhead 5.40 19.00 manufacturing profit $ 3.00 .

Based on the provided information for Scottie Sweater Company, what is the manufacturing profit per sweater?

A) $2.00
B) $3.00
C) $4.00
D) $5.00

Answer 1

The manufacturing profit per sweater for Scottie Sweater Company is a loss of $4.00, which is calculated by subtracting the total manufacturing costs from the selling price per sweater.

Step-by-step explanation:

Based on the provided information for Scottie Sweater Company, the manufacturing profit per sweater is calculated by subtracting the total cost to manufacture from the selling price per sweater. The selling price per sweater is stated to be $35.00, and the costs to manufacture include raw materials costing $21.00, direct labor at $7.20, and manufacturing overhead at $10.80, coming to a total of $39.00. The manufacturing profit (loss) per sweater is the selling price of $35.00 minus the manufacturing costs of $39.00, resulting in a loss of $4.00. Thus, the answer is C) $4.00.