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The Ricci Company is decentralized, and divisions are considered investment centers. Ricci has one division that manufactures oak dining room chairs with upholstered seat cushions.

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The Ricci Company is decentralized, and divisions are considered investment centers. Ricci 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. (i) (Click the icon to view additional informatic Read the requirements. Requirement 1. Determine the total contribution margin for Ricci Company for the quarter. Requirement 2. Assume the Chair Division purchases the 900 cushions needod from the Cushion Division at its current sales price. What is margin for each division and the company? More info The Chair Division currently purchases the cushions for $32 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: 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? 3. Assume the Chair Division purchases the 900 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 Ricci Company? 5. Assume the Cushion Division has capacity of 1,800 cushions per quarter and can continue to supply its outside customers with 900 cushions per quarter and also supply the Chair Division with 900 cushions per quarter. What transfer price should Ricci Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter

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