utton Company is decentralized, and divisions are considered investment centers. Dutton has one division that manufactures oak room chairs with upholstered seat cushions. The Chair Division cuts, assembles, and finishes the oak chairs and then purchases and itaches the seat cushions (Click the icon to view additional information.) Read the requirements More Info * Requirement 1. Determine the total contribution margin for Dutton Company for the quarter. Number of units * Contribution margin per unit = Total contribution margin Cha Division 1,100 15 16,500 Curon Division 1,100 10 11.000 Tota 27,500 - X = Requirement 2. Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its current sal Number of units * Contribution margin per unit - Total contribution margin Cha Division 1,100 7 7,700 Cuson Division 1.100 10 11,000 Tota 18,700 Requirement 3. Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its current var Number of units * Contribution margin per unit = Total contribution margin Che Division 1,100 17 18,700 Cus on Division 1.100 0 0 Tot 18,700 The Chair Division currently purchases the cushions for $10 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 Chair Division Cushion Division Sales Price per Chair $ 80 Sales Price per Cushion $ 18 Variable Cost other than cushion) 55 Variable Cost per Cushion 8 Variable Cost (cushion) 10 $ 15 $ 10 Contribution Margin per Chair Contribution Margin per Cushion Ints) K Print Done Requirement 4. Review your answers for Requirements 1, 2 and 3. What is the best option for Dutton Company? che (Click the icon to view additional information.) The Dutton Company is decentralized, and divisions are considered investment centers. Dutton 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 Chair Division 1,100 17 18.700 Cushion Division 1.100 0 0 Total 18.700 Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Dutton Company? The best option for Dutton is By having the Chair Division purchase the cushions from an outside vendor, the company would generate v in total contribution margin than if the division purchases cushions internally. Requirement 5. Assume the Cushion Division has capacity of 2,200 cushions per quarter and can continue to supply its outside customers with 1,100 cushions per quarter and also supply the Chair Division with 1,100 cushions per quarter. What transfer price should Dutton Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Dutton 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 Chair Division 1,100 15 Cushion Division-external 1,100 10 Total contribution margin 16,500 = 11,000 Cushion Division-internal 1,100 x Total