0 (Click the icon to view additional information.) The Rossi Company is decentralized, and divisions are considered investment centers. Rossi has one division that manufactures oak dining room chairs with upholstered seat cushions. The Chair Division cuts, assembles, and finishes the oak chairs and then purchases and attaches the seat cushions. Read the comments Requirement 1. Determine the total contribution margin for Rossi Company for the quarter. Number of units Contribution margin per unit Total contribution margin Chair Division Cushion Division X Total X X Requirement 2. Assume the Chair Division purchases the 1,600 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company? Number of units Contribution margin per unit Total contribution margin Chair Division Cushion Division Total Requirement 3. Assume the Chair Division purchases the 1,600 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company? (Enter" for any zero amounts.) Number of units Contribution margin per unit Total contribution margin Chal Division x Cushion Division Total Requirement 4. Review your answers for Requirements 1, 2 and 3. What is the best option for Rossi Company? The best option for Rossi is By having the Chair Division purchase the cushions from an outside vendor, the company would generate division purchases cushions internally in total contribution margin than if the More Info - um r that The Chair Division currently purchases the cushions for $25 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 1,600 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,600 cushions per quarter. The two divisions report the following information: Chair Division Cushion Division $ 110 $ 26 sume for e Sales Price per Cushion Variable Cost per Cushion 10 What Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) Contribution Margin per Chair 42 25 $ A 43 16 Contribution Margin per Cushion Print Done eview your answers for Requirements 12 and 3 What is the best antion for Rasai Camnanu od Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Rossi Company? The best option for Rossi is argin than if the By having the Chair Division division purchases cushions Requirement 5. Assume the cushions per quarter and als reasoning. Using the transfer the current scenario (Requirement 1). for the Chair Division to purchase cushions internally at the current sales price (Requirement 2) for the Chair Division to purchase cushions Internally at the current variable cost (Requirement 3) iers with 1,600 Explain your Rossi Company should set the transfer price at S because the Chair Division would not be willing to pay more than Total Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Rossi Company? The best option for Rossi is in total contribution By having the Chair Division purchase the cushions from an outside vendor, the company would generate division purchases cushions internally. Requirement 5. Assume the Cushion Division has capacity of 3,200 cushions per quarter and can continu cushions per quarter and also supply the Chair Division with 1,600 cushions per quarter. What transfer pric reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. less Outside custo Company s more Rossi Company should set the transfer price at because the Chair Division would not be willing to pay more than Requirement 5. Assume the Cushion Division has capacity of 3,200 cushions per quarter and can continue to supply its outside customers with 1,600 cushions per quarter and also supply the Chair Division with 1,600 cushions per quarter. What transfer price should Rossi Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Rossi Company should set the transfer price at 5 | because the Chair Division would not be willing to pay more than Using the transfer price you determined, calculate the total contribution margin for the quarter. Number of units X Contribution margin per unit Total contribution margin Chair Division X Cushion Division external X Cushion Division-internal X Total Requirement 5. Assume the Cushion Division has capacity of 3,200 cushions per quarter and can continue to supply its outside customers with 1,600 cushions per quarter and also supply the Chair Division with 1,600 cushions per quarter. What transfer price should Rossi Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Rossi Company should set the transfer price ats because the Chair Division would not be willing to pay more than in margin the price for which it can purchase the cushions from an outside vendor the price for which the Cushion Division can sell the cushions to outside customers Chair DIVISION Cushion Division external Cushion Division--intemal X Total Che