The Hobson Company is decentralizod, and divisions arc considerod investment centers. Hcbson has onc 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 atlaches the seat cushiois (Click the icon to view additional infomation) Read the requirements Requirement 1. Determine the total contribution margin tor Hobson Company tor the quarter Number of units xContribution Total contribution margin margin per unit Chair Division Cushion Division Total Requirement 2. Assume the Chair Division purchases the 1,200 cushicns needed from the Cushion Division at its current salos price. What is the total contribution margin for each division and the company? Number of units x Contribution margin per unitTotal contribution margin Chair Division Cushion Division Tolal Requirement 3. Assume the Chair Division purchases the 1,200 cushions rieeded frorn the Cushion Division at its current variable cost What is the total contribution margin for each division and the company? (EnterO for any zero amounts.) Number ot units x Contribution margin per untTotal contnbution margin Chai Division 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 tor Hobson is r, the company would Hy having the :nair IV lon u chase he cushions trom an outside ven or the company would enerate n total contribu on margin than it the divsion purchases aish ons internal chases Requirement 5. Assume the Cushion Division has capacity ot 2,400 cushions per quarter and can continue to supply its outside customers with 1,200 cushions per quarter and also supply the Chair Division with 1,200 cushions per quarter What transter pnce should Hobson Company set? Explain your reasoning Using the transter price you determined, caculate the total contnbution margin tor theqarter Hobson Company should set the transfer price at S because the Chair Division would not be willing to pay more than Using th transfer price you determincd, calculate the total contrbution margin for the quarter detcrmined, c Number of units Contribution margin per u nit Total contribution margin Chair Division Cushion Division-externl Cushion Divisionn-internal Total More Info The Chair Division currently purchases the cushions for $20 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company The Chair Division currently sells 1,200 chairs per quarter, and the Cushion Division is operating at capacity, which is 1,200 cushions per quarter. The two divisions report the following information: Chair Division Cushion Division $ 25 Sales Price per Chair $ 95 Sales Price per Cushion Variable Cost (other than cushion) 50 Variable Cost per Cushion 20 Variable Cost (cushion) $ 25 $ 14 Contribution Margin per Chair Contribution Margin per Cushion PrintDone