Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer every part. Thank you The Coley Company is decentralized, and divisions are (Click the icon to view additional information.) considered investment centers. Coley

Please answer every part. Thank you image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
The Coley Company is decentralized, and divisions are (Click the icon to view additional information.) considered investment centers. Coley has one division that manufactures oak dining room chairs with Read the requirements. upholstered seat cushions. The Chair Division cuts, assembles, and finishes the oak chairs and then purchases and attaches the seat cushions. Requirement 1. Determine the total contribution margin for Coley Company for the quarter. Total Requirement 2. Assume the Chair Division purchases the 900 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company? More info 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 900 chairs per quarter, and the Cushion Division is operating at. capacity. which is 900 cushions per quarter. The two divisions report the following information: Requirement 2. Assume the Chair Division purchases the 900 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company? Requirement 3. Assume the Chair Division purchases the 900 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company? (Enter " 0 " for any zero amounts.) Total Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Coley Company? Than hanat antinn forr Colour ie 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. Kequirement 5 . Assume the Cushion Division has capacity of 1,800 cushions per quarter and can continue to supply its outside customers with 900 cushions per quarter and also supply the Chair Division with 900 cushions per quarter. What transfer price should Coley Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. because the Chair Division would not be willing Coley Company should set the transfer price at to pay more than

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Smoke And Mirrors Inc Accounting For Capitalism

Authors: Nicolas Vron, Matthieu Autret, Alfred Galichon, George Holoch

1st Edition

0801444160, 978-0801444166

Students also viewed these Accounting questions

Question

2. What potential barriers would you encourage Samuel to avoid?

Answered: 1 week ago