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Frocks and Gowns, Inc., has two divisions, Day Wear and Night Wear. The Day Wear...

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Accounting

Frocks and Gowns, Inc., has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $850,000 and produces (and sells) 116,000 units of Collars at a market price of $10.70 per unit. Variable costs total $5.00 per unit, and fixed charges are $3.50 per unit (based on a capacity of 136,000 units). The Night Wear Division wants to purchase 24,000 units of Collars from The Day Wear Division. However, the Night Wear Division is only willing to pay $6.65 per unit. What is the contribution margin for the Day Wear Division without the transfer to the Night Wear Division?

$255,200.

$661,200.

$771,400.

$1,105,200.

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