Determining transfer pricing The Harris Company is decentrated and divisions are considered investment centers, Harris hasone division that manufacture cardining room chars weh upholstered seat cushion. The Cal Division combles, and fishes the cok chairs and then purchases and these seat cushions. The Chair Division currently purchases the cushions for 22 trom an outside vendor The Cushion Division manufactures upholstered seat cushions that are sold to customers to the company. The Chair Oision content 800 chairs per quare and the Cushion Division is operating at capacity, which is 800 cushione per quarter. The two divisions report the following information: Chair Division Cushion Division Sales Price per Chan 585 Sales Price per Cushion Variable Cost other than cushion 42 Variable Cost per Cushion 13 Variable con union 22 Contribution Margin per Chair $21 Contribution Margin per Cushion 19 Requirements 1. Determine the total contribution margin for Hanis Company for the quarter 2. Assume the Chair Division purchases the 800 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 800 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 Hamis Company? 5. Assume the Cushion Division has capacity of 1.600 cushions per quarter and can continue to supply its outside customers with 800 cushions per quarter and also supply the Chair Division with 800 cushions per quarter. What transfer price should Harris Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the