The Rossi Company is decentralized, and divisions are considered investment centers. Rossi 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.

Kequirement $1.$ vetermine the total contribution margin tor Rossi Company tor the quarter.

Requirement $2.$ Assume the Chair Division purchases the $1,100$ cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company?

Requirement $4.$ Review your answers for Requirements $1,2,$ and $3.$ What is the best option for Rossi Company?

The best option for Rossi i

By having the Chair Division purchase the cushions from an outside vendor, the company would generate $[$

Using the transfer price you determined, calculate the total contribution margin for the quarter.

Using the transfer price you determined, calculate the total contribution margin for the quarter.

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 $1,100$ chairs per quarter, and the Cushion Division is operating

at capacity, which is $1,100$ cushions per quarter. The two divisions report the following information: