Stavos Company's Screen Division manufactures a standard screen for high-definition televisions (HDTVs). The cost per screen is: Variable cost per screen $ 122 Fixed cost per screen 34* Total cost per screen $ 156 *Based on a capacity of 760,000 screens per year. Part of the Screen Division's output is sold to outside manufacturers of HDTVs and part is sold to Stavos Company's Quark Division, which produces an HDTV under its own name. The Screen Division charges $197 per screen for all sales. The net operating income associated with the Quark Division's HDTV is computed as follows: $ 578 $ 197 231 Selling price per unit Variable cost per unit: Cost of the screen Variable cost of electronic parts Total variable cost Contribution margin Fixed costs per unit Net operating income per unit *Based on a capacity of 210,000 units per year. 4341 428 150 84* $ 66 The Quark Division has an order from an overseas source for 4,500 HDTVs. The overseas source wants to pay only $407 per unit. Required: 1. Assume the Quark Division has enough idle capacity to fill the 4,500-unit order. Is the division likely to accept the $407 price or to reject it? 2. Assume both the Screen Division and the Quark Division have idle capacity. Under these conditions, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division rejects the $407 price? 3. Assume 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. Under these conditions, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division accepts the $407 unit price? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume the Quark Division has enough idle capacity to fill the 4,500-unit order. Is the division likely to accept the $407 price or to reject it? Reject Accept Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume both the Screen Division and the Quark Division have idle capacity. Under these conditions, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division rejects the $407 price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Financial advantage (disadvantage) on a per unit basis Required 1 Required 2 Required 3 Assume 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. Under these conditions, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division accepts the $407 unit price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Show less Financial advantage (disadvantage) on a per unit basis
