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Frocks and Gowns, Inc., has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $770,000 and produces (and
Frocks and Gowns, Inc., has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $770,000 and produces (and sells) 108,000 units of Collars at a market price of $10.40 per unit. Variable costs total $5.00 per unit, and fixed charges are $4.80 per unit (based on a capacity of 128,000 units). The Night Wear Division wants to purchase 27,000 units of Collars from The Day Wear Division. However, the Night Wear Division is only willing to pay $6.75 per unit What is the contribution margin for the Day Wear Division without the transfer to the Night Wear Division? O $729,000. O $64,800. O $834,800. O $583.200
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