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 X Total Requirement 2. Assume the Chair Division purchases the 1,600 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 X Total Requirement 3. Assume the Chair Division purchases the 1,600 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.) Number of units X Contribution margin per unit = Total contribution margin Chair Division Cushion Division 11 Total Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Cutler Company? Requirement 5. Assume the Cushion Division has capacity of 3,200 cushions per quarter and can continue to supply its outside customers with 1,600 cushions per quarter and also supply the Chair Division with 1,600 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 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 X Chair Division Cushion Division-external X Cushion Division-internal Total - X Requirements 1. Determine the total contribution margin for Cutler Company for the quarter. 2. Assume the Chair Division purchases the 1,600 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 1,600 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 3,200 cushions per quarter and can continue to supply its outside customers with 1,600 cushions per quarter and also supply the Chair Division with 1,600 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. Print Done 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 argin than if the division By having the Chair Division purchases cushions internall Requirement 5. Assume the quarter and also supply the transfer price you determines, the current scenario (Requirement 1) for the Chair Division to purchase cushions internally at the current sales price (Requirement 2) for the Chair Division to purchase cushions internally at the current variable cost(Requirement 3) ers with 1 600 cushions per reasoning Using the 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 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 3.200 cushions per quarter and can continu quarter and also supply the Chair Division with 1600 cushions per quarter. What transfer price should Cutl transfer price you determined calculate the total contribution margin for the quarter. in total contribution margin than if the division 6 less utside customers with 1,600 cushions per ? Explain your reasoning Using the more * More Info - X Te TS em 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 1,600 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,600 cushions per quarter. The two divisions report the following information: Divi ond CA 34 $ Chair Division Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) Cushion Division 95 Sales Price per Cushion 51 Variable Cost per Cushion 32 8 sales direm in for $ 26 $ 12 Contribution Margin per Chair Contribution Margin per Cushion air Divi Print Done hinn ose from any list or enter any number in the input fields and then continue to the next
