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The Cutler Company is decentralized, and divisions are considered investment centers. Cutler has one division that manufactures oak dining room chairs with upholstered seat cushions.
The Cutler Company is decentralized, and divisions are considered investment centers. Cutler has one division 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. 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 Reauirement 1. Determine the total contribution marain for Cutler Combanv for the auarter at capacity, which is 1,500 cushions per quarter. The two divisions report the following information: 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 c IUtal Requirements Iotal 1. Determine the total contribution margin for Cutler Company for the quarter. Requirement 4. Review your answers for Requirements 1, 2, and 3 . What is the best option for Cutler Company? 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 The best option for Cutler margin for each division and the company? 3. Assume the Chair Division purchases the 1,500 cushions needed from the Cushion Division at its current variable cost. What is the total contribution
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