or x Requirements co sar 1. Determine the total contribution margin for Costa Company for the quarter. 2. Assume the Chair Division purchases the 1,200 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 1,200 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 Costa Company? 5. Assume the Cushion Division has capacity of 2.400 cushions per quarter and can continue to supply its outside customers with 1.200 cushions per quarter and also supply the Chair Division with 1.200 cushions per quarter What transfer price should Costa Company set? Explain your reasoning Using the transfer price you determined, calculate the total contribution margin for the quarter US ma ma cus bnm Print Done and The Costa Company is decentralized, and divisions are considered investment centers Costa has one division that manufactures oak dining room chairs with upholstered seat cushions. The Chair Division cuts, assembles, and finishes the oak chales and then purchases and attaches the seat cushions (Click the icon to view additional information) Read the courement Requirement 1. Determine the total contribution margin for Costa Company for the quarter Number of units X Contribution margin perunt Total contribution margin Chair Division Cushion Division x Total Requirement 2. Assume the Chair Division purchases the 1.200 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 Contribution margin per unit Total contribution margin Chair Division Cushion Division Total 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 Cushion Division 1 (Click the icon to view additional information ) Read the rewirements Total Requirement 4. Review your answers for Requirements 1, 2 and 3 What is the best option for Costa Company? The best option for Costa By having the Chair Division purchase the cushions from an outside vender the company would generate in total contribution margin than if the division purchases cushions interally Requirement 5. Assume the Cushion Division has capacity of 2.400 cushions per quarter and can continue to supply its outside customers with 1200 cushions per quarter and also supply the Chair Division with 1.200 cush per quarter. What transfer price should Costa Company Set? Explain your reasoning Using the transfer price you determined, calculate the total contribution margin for the quarter Costa Company should set the transfer price at because the Chair Division would not be willing to pay more than Costa Company should set the transfer price at $ because the Chair Division would not be willing to pay more than X Using the transfer price you determined, calculate the total contribution margin for the quarter. Number of units Contribution margin per unit Chair Division Cushion Division-external Total contribution margin Cushion Division-Internal X Total Chcem u let anter (Click the icon to view additional information) nsidered investment centers. Costa has one division seat cushions The Chair Division cuts assembles, and ne i More Info or trib The Chair Division currently purchases the cushions for $25 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company The Chair Division currently sells 1,200 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,200 cushions per quarter. The two divisions report the following information: or the Chair Division Sales Price per Chair Variable Cost (other than cushion) $ $ 110 Cushion Division Sales Price per Cushion Variable Cost per Cushion 26 15 Entrie 56 25 Variable Cost (cushion) Contribution Margin per Chair $ 29 11 Contribution Margin per Cushion Print Done fo es the nput fields and then continue to the next question 14 ho
