i Requirements 1. Determine the total contribution margin for Cutler Company for the quarter. 2. Assume the Chair Division purchases the 500 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 500 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 Cutler Company? 5. Assume the Cushion Division has capacity of 1,000 cushions per quarter and can continue to supply its outside customers with 500 cushions per quarter and also supply the Chair Division with 500 cushions per quarter. What transfer price should Cutler Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. pri Cha med mbel Print Done The Cutler Company is decentralized, and divisions are considered investment centers, Cutler 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. (Click the icon to view additional information.) Read the requirements Requirement 1. Determine the total contribution margin for Cutler Company for the quarter. Number of units Contribution margin per unit Total contribution margin Chair Division X Cushion Division Total Requirement 2. Assume the Chair Division purchases the 500 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 X Contribution margin per unit Total contribution margin Chair Division X Cushion Division Total Requirement 3. Assume the Chair Division purchases the 500 cushions needed 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.) Number of units X Contribution margin per unit Total contribution margin Chair Division Cushion Division X Total Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Cutler Company? The best option for Cutler is in total contribution margin than if the division By having the Chair Division purchase the cushions from an outside vendor, the company would generate purchases cushions internally Requirement 5. Assume the Cushion Division has capacity of 1,000 cushions per quarter and can continue to supply its outside customers with 500 cushions per quarter and also supply the Chair Division with 500 cushions per quarter. What transfer price should Cutler Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Cuter Company should set the transfer price at | because the Chair Division would not be willing to pay more than Using the transfer price you determined, calculate the total contribution margin for the quarter, Contribution margin per unit Chair Division C Number of units X Total contribution margin Cushion Division external X Cushion Division-internal X Total Requirement 5. Assume the Cushion Division has capacity of 1,000 cushions per quarter and can continue to supply its outside customers with 500 cushions per quarter and also supply the Chair Division with 500 cushions per quarter. What transfer price should Cutler Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Cutler Company should set the transfer price at $ because the Chair Division would not be willing to pay more than n margin 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. Chair DIVISION Cushion Division-external Cushion Division internal X Total i More Info The Chair Division currently purchases the cushions for $22 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 500 chairs per quarter, and the Cushion Division is operating at capacity, which is 500 cushions per quarter. The two divisions report the following information: Chair Division Cushion Division $ 80 $ 25 Sales Price per Chair Variable Cost (other than cushion) Sales Price per Cushion Variable Cost per Cushion 30 13 Variable Cost (cushion) 22 $ 28 LA 12 Contribution Margin per Chair Contribution Margin per Cushion nd Print Done No