The Hobson Company is decentralized, and divisions are considered investment centers. Hobson 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. Requirement 1. Determine the total contribution margin for Hobson Company for the quarter. 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? iviui 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? (Ente Requirements 1. Determine the total contribution margin for Hobson 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 Hobson 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 Hobson Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. ivia Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Hobson Company? The best option for Hobson is By having the Chair Division purchase the cushions from an outside vendor, the company would generate in total contribution margin than if the division purchases cushions internally. the transfer price you determined, calculate the total contribution margin for the quarter. Hobson 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. More 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 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