Question Help The Dutton Company is decentralized, and divisions are considered investment centers, Dutton has one Alc division that manufactures cok dining room chairs with upholstered seat cushions. The Chair Division cuts h e con to view additional information) assembles, and finishes the oak chairs and then purchases and attaches the seat cushions Read the requirements Number of units X Contribution margin perunt Total contribution margin Chair Division 1500 x 2 3 34500 Cushion Division D 1 500 25 = 37500 72000 Total Requirement 2. Assume the Chair Division purchases the 1,500 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 perunt Total contribution margin Chair Division D 9 500 Cushion Division 1500 Total current variable cost. What is the total contribution margin for each division and the company? En Requirement 3. Assume the Chair Division purchases the 1,500 cushions needed from the Cushion Division of "O" for any zero amounts) Number of units X Contribution margin per unit. Total contribution margin Chair Division 1500 x Cushion Division 1500 Total 25 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 1,500 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,500 cushions per quarter. The two divisions report the following information: Chair Division $ Cushion Division Sales Price per Cushion Variable Cost per Cushion $ 34 Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) Contribution Margin per Chair 110 55 32 23 $ 25 Contribution Margin per Cushion -- pur answers for Requirements 1, 2, and 3. What is the best option for Dution 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 contrbution margin than the division purchases cushions in all Requirement 5. Assume the Cushion Division has capacity of 3.000 cushions per quarter and can continue to supply its outside customers with 1500 cushions per and supply the 1,500 cushions per quarter. What transfer price should Dutton Companys? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the que Dutton Company should set the transfer price at $ because the Chair Division would not be willing to pay more than Total contribution margin Using the transfer price you determined, calculate the total contribution margin for the quarter. Number of units X Contribution margin per unit - Chair Division Cushion Division-external Cushion Division-internal Total
