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 (Click the icon to view additional information.) Read the requirements More Info X Orgin at its current sales price What is the total The Chair Division currently purchases the cushions for $30 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: Chair Division Cushion Division Sales Price per Chair S 110 Sales Price per Cushion 34 Variable Cost (other than cushion) 55 Variable Cost per Cushion 14 Variable Cost (cushion) 30 $ 25 Contribution Margin per Chair Contribution Margin per Cushion $ 20 gin Requirements - X fiable cost. What is the NUME Chair Division Cushion Division Total Requirement 4. Review your al The best option for Hobson is 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 By having the Chair Division pul hinn minn. ribution margin than if Choose from any list or enter (Click the icon to view additional information.) 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 Read the requirements Requirement 1. Determine the total contribution margin for Hobson Company for the quarter. Number of units X Contribution margin per unit Total contribution margin Chair Division Cushion Division 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 "O" for any zero amounts) Number of units Contribution margin per unit - Total contribution margin Chair Division X = Cushion Division X Total 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 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 (Click the icon to view additional information) Read the requirements 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 Contribution margin per unit Total contribution margin Chair Division X X Cushion Division x Total 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 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 Hobson Company set? Explain your reasoning. Using 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 X Total contribution margin Using the transfer price you determined, calculate the total contribution margin for the quarter Number of units Contribution margin per unit Chair Division X Cushion Division-external Cushion Division-internal X Total Choose from any list or enter any number in the input fields and then continue to the next question (Click the icon to view additional information.) 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 Read the requirements Requirement 3. Assume the Chair Division purchases the 1,600 cushions needed from the Cushion Division at its current variable cos total contribution margin for each division and the company? (Enter "O" for any zero amounts.) Number of units * Contribution margin per unit Total contribution margin Chair Division 11 Cushion Division = Total 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 p the division purchases cushior the current scenario (Requirement 1) for the Chair Division to purchase cushions internally at the current sales price (Requirement 2) Requirement 5. Assume the cushions per quarter and also for the Chair Division to purchase cushions internally at the current variable cost (Requirement 3). your reasoning. Using the trany 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, Number of units Contribution margin per unit Total contribution margin X Chair Division Cushion Division-external Cushion Division-internal X Total Choose from any ist or enter any number in the innat.fi mions needed from the Cushion Division at its current variable cost. What is th " for any zero amounts.) rgin per unit Total contribution margin 11 3. What is the best option for Hobson Company? de vendor, the company would generate to in total contribution margin than if less 200 cushions per quarter and can continu 00 cushions per quarter. What transfer pric te the total contribution margin for the quai outside customers with 1,6 on Company set? Explain more because the Chair Division would not be willing to pay more than tribution margin for the quarter, Contribution margin per unit Total contribution margin elds and then continue to the next question the (CH Read the requirements me Hobson Company is decentralized, and divisions are considered vestment centers. Hobson has one division that manufactures oak dining bom chairs with upholstered seat cushions. The Chair Division cuts, ssembles, and finishes the oak chairs and then purchases and attaches ne seat cushions Requirement 3. Assume the Chair Division purchases the 1,600 cushions needed from the Cushion Division at its current var otal contribution margin for each division and the company? (Enter "0" for any zero amounts.) Number of units Contribution margin per unit Total contribution margin Chair Division 11 X 11 Cushion Division Total 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 contri the division purchases cushions internally Requirement 5. Assume the Cushion Division has capacity of 3,200 cushions per quarter and can continue to supply its outside cushions per quarter and also supply the Chair Division with 1,600 cushions per quarter. What transfer price should Hobson Com your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter Hobson Company should set the transfer price ats because the Chair Division would not be willing to pay more than the price for which it can purchase the cushions from an outside vendor. the price for which the Cushion Division can sell the cushions to outside customers. Chair Division Cushion Division-external tribution margin Cushion Division-internal X Total