The Dutton Company is decentralized, and divisions are considered investment centers. Dutton has one division that (Click the icon to view additional information.) manulaciures Cak dining room chalirs wd tlua usions. The Chair Division cuts, assembles, and finishes Read the reguirements. pur Requirement 1. Determine the total contribution margin r Dutton Company for the quarter. Number of units = Contribution margin per unit Total contribution margin Chair Division Cushion Division 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? Number of units Contribution margin per unit =Total contribution margin Chair Division Cushion Division Total the total contribution margin for each division and the company? (Enter "0" for any zero amounts.) Requirement 3. Assume the Chair Division purchases the 900 cushions needed from the Cushion Division at its current variable cost. What = Total contribution margin Contribution margin per unit Number of units Chair Division Cushion Division Total Requirement 4. Review your answers for Require ments 1, 2, and 3. What is the best option for Dutton Company? The best option for Dutton is outside vendor, the company would generate By having the Chair Division purchase the cushions from a total contribution margin than if the division purchases cushions internallv. Requirement 5. Assume the Cushion Division has capacity of 1,800 cushions per quarter and can continue to supply transfer price should Dutton Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter outside customers with 900 cushions per quarter and also supply the Chair Division with 900 cushions per quarter. What Dutton 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 Contribution margin per unit Total contribution margin Number of units x Chair Division Cushion Division-external x Cushion Division-internal = Total Choose from any list or enter any number in the input fields and then continue the next question. on r iMore Info The Chair Division currently purchases the cushions for $18 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: division and the c cus ion r Chair Division Cushion Division Sales Price per Chair 110 Sales Price per Cushion 20 Variable Cost (other than cushion) Variable Cost per Cushion 35 12 18 Variable Cost (cushion) h division and the cus 57 Contribution Margin per Cushion 8 Contribution Margin per Chair jon n Print Done
