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The Pendleton division of Unified Furniture purchases lumber, which it uses to fabricate tables, chairs, and other wood furniture. It purchases most of the lumber from Shady Cove Mill, also a division of Unified Furniture. Both the Pendleton division and Shady Cove Mill are profit centers. The Pendleton division proposes to produce a new Shaker-style chair that will sell for $80. The manager is exploring the possibility of purchasing the required lumber from Shady Cove Mill. Production of 800 chairs is planned, using capacity in the Pendleton division that is currently idle. The Pendleton division can purchase the lumber needed for one chair from an outside supplier for $68. Unified Furniture has a policy that internal transfers are priced at fully allocated cost. Assume the following costs for the production of one chair and the lumber required for the chair: Click the icon to view the costs.) Read the requirements. Requirement 1. Assume that the Shady Cove Mill has idle capacity and, therefore, would incur no additional fixed costs to produce the required lumber. Would the Pendleton division manager buy the lumber for the chair from the Shady Cove Mill given the existing transfer-pricing policy? Why or why not? Would the company as a whole benefit if the manager decides to buy from the Shady Cove Mill? Explain. Begin by calculating the Pendleton division's income or loss per chair given the existing transfer pricing policy. (Use parentheses or a minus sign for a loss.) Revenue per chair Division cost per chair: Lumber Manufacturing Selling Division income (loss) per chair Enter any number in the edit fields and then click Check Answer. i - X Data Table Shady Cove-Lumber Cost Pendleton DivisionChair Cost Variable cost $ 42 Variable costs 15 Allocated fixed cost $ $ 57 57 Fully allocated cost Lumber from Shady Cove Pendleton division variable costs Manufacturing $ 18 6 24 Selling $ 81 Total variable cost Print Done

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