Chapter 9 homework 1 question

More info The Chair Division currently purchases the cushions for $25 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 Sales Price per Cushion Variable Cost (other than cushion) Variable Cost per Cushion Variable Cost (cushion) $ 22 Contribution Margin per Chair Contribution Margin per Cushion The Conti Company is decentralized, and divisions are considered investment centers. Conti has one division that manufactures oak dining room chairs with upholstered seat cushions. The Chair Division outs, assembles, and nishes the oak chairs and then purchases and attaches the seat cushions. : 0 (Click the ioon to view additional information.) Requirement 1. Determine the total contribution margin for Conti Company for the quarter. Chair Division Cushion Division Total Number of units x Contribution margin per unit Total contribution margin x x Requirement 2. Assume the Chair Division purchases the 1,100 cushions needed from the Cushion Division at its Chair Division Cushion Division Total Number of units x Contribution margin per unit Total contribution margin current sales price. What is the total contribution margin for each division and the company? x Requirement 3. Assume the Chair Division purchases the 1,100 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 x 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 Conti Company? The best option for Conti is _ in total contribution margin than if the division purchases cushions internally. By having the Chair Division purchase the cushions from an outside vendor, the company would generate : Roqulrement 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 Conti Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter. Conti 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 x Contribution margin per unit = Total contribution margin Chair Division x = Cushion Divisionextemal x = Cushion Divisionintemal x = Total