What is the contribution margin for the day wear division

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Reference no: EM133424652

Question: Frocks and Gowns, Incorporated, has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $770,000 and produces and sells 108,000 units of Collars at a market price of $10.40 per unit. Variable costs for the Collars total $5.00 per unit, and fixed charges are $4.80 per unit (based on a capacity of 128,000 units). The Night Wear Division wants to purchase 27,000 units of Collars from the Day Wear Division. However, the Night Wear Division is only willing to pay $6.75 per unit.

What is the contribution margin for the Day Wear Division without the transfer to the Night Wear Division?

Reference no: EM133424652

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