Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Stavos Company's Screen Division manufactures a standard screen for high-definition televisions (HDTVS). The cost per screen is: Variable cost per screen Pixed cost per screen
Stavos Company's Screen Division manufactures a standard screen for high-definition televisions (HDTVS). The cost per screen is: Variable cost per screen Pixed cost per screen Total cont per screen $ 119 32 $ 151 Based on a capacity of 770,000 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 $193 per screen for all sales. The net operating income associated with the Quark Division's HDTV is computed as follows: 5 584 $193 235 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 428 156 86. $70 "Based on a capacity of 150,000 units per year The Quark Division has an order from an overseas source for 5,100 HDTVs. The overseas source wants to pay only $403 per unit. Required: 1. Assume the Quark Division has enough Idle capacity to fill the 5,100-unit order. Is the division likely to accept the $403 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 $403 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 $403 unit price
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started