Stavos Companys screen Division manufactures a standard screen for high-definition televisions (HDTVs). The cost per screen is:

Variable cost per screen	$	124
Fixed cost per screen		28*
Total cost per screen	$	152

*Based on a capacity of 760,000 screen per year.

Part of the Screen Divisions output is sold to outside manufacturers of HDTVs and part is sold to Stavos Companys Quark Division, which produces an HDTV under its own name. The Screen Division charges $192 per screen for all sales.

The costs, revenue, and net operating income associated with the Quark Divisions HDTV are given below:

Selling price per unit			$	580
Variable costs per unit:
Cost of the screen	$	192
Variable cost of electronic parts		238
Total variable cost				430
Contribution margin				150
Fixed costs per unit				90*
Net operating income per unit			$	60

*Based on a capacity of 170,000 units per year.

The Quark Division has an order from an overseas source for 5,100 HDTVs. The overseas source wants to pay only $408 per unit.

2.

Assume that both the Screen Division and the Quark Division have idle capacity. Under these conditions, would it be advantageous for the company as a whole if the Quark Division rejects the $408 price?

Price offered per player
Less variable costs per player:
Screen Division
Quark Division

3.	Assume that the Quark Division has idle capacity but that the Screen Division is operating at capacity and could sell all of its screens to outside manufacturers. Compute the profit impact to the Quark Division of accepting the 5,100-unit order at the $408 unit price.

Price offered per player
Less:
Lost revenue from sales of Screen to outsiders
Variable cost of Quark Division