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

Variable cost per screen	$	123
Fixed cost per screen		29	*
Total cost per screen	$	152

*Based on a capacity of 850,000 screens 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 $190 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			$	583
Variable cost per unit:
Cost of the screen	$	190
Variable cost of electronic parts		231
Total variable cost				421
Contribution margin				162
Fixed costs per unit				86	*
Net operating income per unit			$	76

*Based on a capacity of 160,000 units per year.

The Quark Division has an order from an overseas source for 4,900 HDTVs. The overseas source wants to pay only $404 per unit.

Required:

1. Assume the Quark Division has enough idle capacity to fill the 4,900-unit order. Is the division likely to accept the $404 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 $404 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 $404 unit price.

Stavos Company's Screen Division manufactures a standard screen for high-definition televisions (HDTVs). The cost per screen follows Variable cost per screen $123 Fixed cost per screen 29 $152 Total cost per screen Based on a capacity of 850,000 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 $190 per screen for all sales The costs, revenue, and net operating income associated with the Quark Division's HDTV are given below Selling price per unit Variable cost per unit: Cost of the screen Variable cost of electronic $583 $190 231 parts 421 Total variable cost Contribution margin Fixed costs per unit 162 86* $ 76 Net operating income per unit Based on a capacity of 160,000 units per year The Quark Division has an order from an overseas source for 4,900 HDTVs. The overseas source wants to pay only $404 per unit. Required 1. Assume the Quark Division has enough idle capacity to fill the 4,900-unit order. Is the division likely to accept the $404 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 $404 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 $404 unit price Required 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 $404 price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Financial advantage (disadvantage) on a per unit basis 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 $404 unit price. (Any "Financial Disadvantage" amounts should be entered as a negative.) Show less Financial advantage (disadvantage) on a per unit basis