Business, 15.07.2020 01:01 asapocean0317
The Coley Company is decentralized, and divisions are considered investment centers. Coley 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
Requirement
1. Determine the total contribution margin for ca - X Number of units X Contribut Chair Division Cushion Division Total
2. Assume the Chal Division purchases the 1.0 margin for each division and the company? Number of units X Contribut
a. Determine the total contribution margin for Coley Company for the quarter
b. Assume the Chair Division purchases the 1,000 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company?
c. Assume the Chair Division purchases the 1,000 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company?
3. Review your answers for Requirements 1, 2, and 3. What is the best option for Coley Company? Assume the Cushion Division has capacity of 2,000 cushions per quarter and can continue to supply its outside customers with 1,000 cushions per quarter and also supply the Chair Division with 1,000 cushions per quarter. What transfer price should Coley Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quartie
chair division cushion division
Sales price per chair 85 Sales price per cushion 22
Variable cost 51 variable cost 10
variable cost cushion 20
Contribution margin per chair 14 12
Answers: 1
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The Coley Company is decentralized, and divisions are considered investment centers. Coley has one d...
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