1. Determine the total contribution margin for Chacon Company for the quarter. 2. . Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company? 3. Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company? 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Chacon Company? 5. Assume the Cushion Division has capacity of 2,200 cushions per quarter and can continue to supply its outside customers with 1,100 cushions per quarter and also supply the Chair Division with 1,100 cushions per quarter. What transfer price should Chacon Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. The Chair Division currently purchases the cushions for $30 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 1,100 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,100 cushions per quarter. The two divisions report the following information: Cushion Division $ $ 34 Chair Division Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) 95 Sales Price per Cushion 42 Variable Cost per Cushion 30 12 $ 23 Contribution Margin per Chair BA Contribution Margin per Cushion 22 The Chacon Company is decentralized, and divisions are considered investment centers. Chacon 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. i x Requirement 1. Determine the total contribution margin for Chacon Company for the quarter. Number of units Contribution margin per unit Total contribution margin Chair Division Cushion Division X II Total 1. Determine the total contribution margin for Chacon Company for the quarter. 2. . Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company? 3. Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company? 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Chacon Company? 5. Assume the Cushion Division has capacity of 2,200 cushions per quarter and can continue to supply its outside customers with 1,100 cushions per quarter and also supply the Chair Division with 1,100 cushions per quarter. What transfer price should Chacon Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. The Chair Division currently purchases the cushions for $30 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 1,100 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,100 cushions per quarter. The two divisions report the following information: Cushion Division $ $ 34 Chair Division Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) 95 Sales Price per Cushion 42 Variable Cost per Cushion 30 12 $ 23 Contribution Margin per Chair BA Contribution Margin per Cushion 22 The Chacon Company is decentralized, and divisions are considered investment centers. Chacon 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. i x Requirement 1. Determine the total contribution margin for Chacon Company for the quarter. Number of units Contribution margin per unit Total contribution margin Chair Division Cushion Division X II Total
