* More Info s the top The Chair Division currently purchases the cushions for $32 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 1,000 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,000 cushions per quarter. The two divisions report the following information: Chair Division Cushion Division Sales Price per Chair $ 105 Sales Price per Cushion $ 34 Variable Cost (other than cushion) 51 Variable Cost per Cushion Variable Cost (cushion) 32 Contribution Margin per Chair Contribution Margin per Cushion the and No 12 It is the total a 22 contre ento Print Done HEWLETT-PACKARD click the icon to view additional information) Read the requirements 0 of 2 The Dutton Company is decentralized and divisions are considered investment centers Dutton hasone division that manufactures oak dining room chairs with upholstered seat cushions The Chair Division cuts assembles and finishes the ook chairs and then purchases and attaches the seat cushions o tal contribution margin Requirement 1. Determine the total contribution margin for Dution Company for the quarter O of 2 X Contribution margin per t Number of units Char Division Cushion Division is current ses price. What is the total contribution Total Requirement 2. Assume the Chair Division purchases the 1000 cushions needed from the Cushion Division margin for each division and the company? con buon Number of units To Cobution mangin perunt Char Division Cushion Division t Current anable cost what is me seeded from the Cushion Division ) s Requirement 3. Assume the Cha Division purchases the 1.000 margin for each division and the company helor an Contribution mangan perne Number of units and then continue to the next question Char Division Choose from any ist or enter any number in the inputs e to search Read the te oak chairs and then purchases and attaches the seat cushions Requirement 3. Assume the Chair Division purchases the 1,000 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 Total Requirement 4. Review your answers for Requirements 1, 2 and 3 What is the best option for Dutton Company? The best option for Dutton is By having the Chair Division purchase the cushions from an outside vendor, the company would generate in total contribution margin than if the division purchases cushions internally Requirement 5. Assume the Cushion Division has capacity of 2,000 cushions per quarter and can continue to supply its outside customers with 1,000 cushions per quarter and also supply the Chair Division with 1,000 cushions per quarter. What transfer price should Dutton Company set? Explain your reasoning Using the transfer price you determined, calculate the total contribution margin for the quarter Dutton Company should set the transfer price at because the Chair Division would not be willing to pay more than Choose from any list or enter any number in the input fields and then continue to the next question by having the Cha UIVISION purchase the cushions from an outside vendor, the company would generate purchases cushions internally in total contribution margin than if the division Requirement 5. Assume the Cushion Division has capacity of 2,000 cushions per quarter and can continue to supply its outside customers with 1,000 cushions per quarter and also supply the Chair Division with 1,000 cushions per quarter What transfer price should Dutton Company set? Explain your reasoning Using the transfer price you determined, calculate the total contribution margin for the quarter. Dutton Company should set the transfer price at S 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. Number of units X Contribution margin per unit Total contribution margin Chair Division Cushion Division external Cushion Division-internal Total Choose from any list or enter any number in the input fields and then continue to the next question. HEWLETT-PACK
