The Greco Company is decentralized, and divisions are considered investment Click the icon to view additional information centers. Greco has one division that manufactures del dining room chairs with upholstered seat cushions. The Chair Divisions, sembles, and finishes the Read the requirements oak chars and then purchases and attaches the seat cushions Requirement 1. Determine the total contribution margin for Greco Company for the quarter. Number of units Cortribution morgin perunt . Totul contribution marpin Char Division Cushion Division Total Requirement 2. Assume the Char Division purchases the 800 antions needed from the Cushion Division at its curent sales price. What is the total contribution margin for each division and the company? Number of units Contribution margin perunt Tetal contribution margin Chuir Division Cushion Division Total Requirement 3. Assume the Char Divinon purchases the 800 tone needed from the Cushion vision at da cument variable cout. What is the total contribution margin for each division and the company for any formounts) Number of units Contribution meron perunt. Tot.comwbution margin Chair Division Cushion Division Total Requirement 4. Review your answers for Roqutements 1, 2 and 3. What is the best option for Greco Company The best option for Greco By having the Chair Division purchase the cushions from an outside vender the company would generate in total contribution margin than the dision purchases cushions internally Requirements. Asume the Cushion Division has capacity of 1,500 cushione per quarter and can continue to supply its outside customers with 800 cushions per quarter and also wooly the Chair Dition with anti per certer What transfer price should Greco Company set? Explain your reasoning Using the transfer the total for the Gro Company should not the transfer price because the Char Dvalon wall not be willing to pay more than Using the transfer price you determined, calculate the total contribution margin for the cute Number of Contribution margin perunt . Total contribution margin Chair Division Cushion Divistemat Cushion Division Total Requirements - 1. Determine the total contribution margin for Greco Company for the quarter. 2. Assume the Chair Division purchases the 800 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 800 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 Greco Company? 5. Assume the Cushion Division has capacity of 1,600 cushions per quarter and can continue to supply its outside customers with 800 cushions per quarter and also supply the Chair Division with 800 cushions per quarter. What transfer price should Greco Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Print Done More Info The Chair Division currently purchases the cushions for $10 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 800 chairs per quarter, and the Cushion Division is operating at capacity, which is 800 cushions per quarter. The two divisions report the following information: $ 20 Chair Division Sales Price per Chair Variable Cost (other than cushion) Variable Cost (cushion) Contribution Margin per Chair Cushion Division 65 Sales Price per Cushion 35 Variable Cost per Cushion 10 8 $ 20 $ 12 Contribution Margin per Cushion Print Done
