Bright Future Company has two divisions 'FXR' and Division and Division 'FQR'. Both divisions are independent. Each division serves a different market in the furniture industry. Division 'FXR manufactures furniture that is use by the canteens/coffee bars. The division plans to introduce cushioned seat for the counter chairs. A cushioned seat currently made by the Division 'FQR' for use on its stylish stool could be modified for use on the new counter chair. Division 'FQR can make the necessary modifications to the cushioned seat easily. The raw materials used in Division 'FXR' seat are slightly different and should cost about 20 percent more than those used in Division 'FQR' stylish stool. However, the labour time should be the same because the seat fabrication operation is basically the same. Division 'FQR' is operating at full capacity. By making the cushion seats for division 'FXR', Division FQR' have to cut its production of stylish stools. However, Division 'FOR' can increase its production of normal stools. The labour time freed by not having to fabricate the frame or assemble the stylish stool can be shifted to the frame fabrication and assembly of the normal stool. Division 'FQR' can switch its labour force between these two models of stools without any loss of efficiency. Labour hours cannot be increase. Division 'FOR' has excess demand for both products. Following are division "FQR's" standard costs for the two stools and a schedule of Division 'FQR's' manufacturing overhead. Bright Future Company has two divisions 'FXR' and Division and Division 'FQR'. Both divisions are independent. Each division serves a different market in the furniture industry. Division 'FXR manufactures furniture that is use by the canteens/coffee bars. The division plans to introduce cushioned seat for the counter chairs. A cushioned seat currently made by the Division 'FQR' for use on its stylish stool could be modified for use on the new counter chair. Division 'FQR can make the necessary modifications to the cushioned seat easily. The raw materials used in Division 'FXR' seat are slightly different and should cost about 20 percent more than those used in Division 'FQR' stylish stool. However, the labour time should be the same because the seat fabrication operation is basically the same. Division 'FQR' is operating at full capacity. By making the cushion seats for division 'FXR', Division FQR' have to cut its production of stylish stools. However, Division 'FOR' can increase its production of normal stools. The labour time freed by not having to fabricate the frame or assemble the stylish stool can be shifted to the frame fabrication and assembly of the normal stool. Division 'FQR' can switch its labour force between these two models of stools without any loss of efficiency. Labour hours cannot be increase. Division 'FOR' has excess demand for both products. Following are division "FQR's" standard costs for the two stools and a schedule of Division 'FQR's' manufacturing overhead
