and divisione are considered investment.canters Rossi More Info The Chair Division currently purchases the cushions for $26 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 1,400 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,400 cushions per quarter. The two divisions report the following information: $ $ Cushion Division 85 Sales Price per Cushion 45 Variable Cost per Cushion 26 Chair Division Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) 32 11 Contribution Margin per Chair 14 CA Contribution Margin per Cushion $ 21 o1 od 200 Print Done air any (Click the icon to view additional information.) Read the requirements. 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. Requirement 1. Determine the total contribution margin for Rossi Company for the quarter. X 11 = Number of units Contribution margin per unit Total contribution margin Chair Division 1400 14 19600 29400 Cushion Division 1400 21 49000 Total Requirement 2. Assume the Chair Division purchases the 1,400 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 1400 Cushion Division 1400 Total 49000 X X 11 Requirement 3. Assume the Chair Division nurchases the 1.400 cushions needed from the Cushion Division at its Choose from any list or enter any number in the innuit fields and the Requirement 3. Assume the Chair Division purchases the 1,400 cushions paded from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company? (Enter "O" for any zero amounts.) X Number of units 1400 Contribution margin per unit Il Total contribution margin Chair Division X 11 Cushion Division 1400 X 11 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 total contribution margin than if the division purchases cushions internally. in Ennnn Choose from any list or enter any number in the input fields and then continue to the next question. Get More Holn 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 the current scenario (Requirement 1). for the Chair Division to purchase cushions internally at the current sales price (Requirement 2). shions fou for the Chair Division to purchase cushions internally at the current variable cost (Requirement 3). kossi company should set the transter price at I pay more than ng to Using the transfer price you determined, calculate the total contribution margin for the quarter. Choose from any list or enter any number in the input fields and then continue to the next question. Get More Help Requirement 5. Assume the Cushion Division has capacity of 2,800 cushions per quarter and can continue to supply its outside customers with 1,400 cushions per quarter and also supply the Chair Division with 1,400 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. because the Chair Division would not be willing to Rossi Company should set the transfer price at pay more than rgin 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. Cushion Division-internal Total Choose from any list or enter any number in the input fields and then continue to the next question. Get More Help purchases and attaches the seat cushions. Requirement 5. Assume the Cushion Division has capacity of 2,800 cushions per quarter and can continue to supply its outside customers with 1,400 cushions per quarter and also supply the Chair Division with 1,400 cushion 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. because the Chair Division would not be willing to Rossi Company should set the transfer price at pay more than Using the transfer price you determined, calculate the total contribution margin for the quarter. Number of units * Contribution margin per unit = Total contribution margin X 11 Chair Division Cushion Division external Cushion Division- internal Total 11 Choose from any list or enter any number in the input fields and then continue to the next
