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

Variable cost per screen	$	118
Fixed cost per screen		28	*
Total cost per screen	$	146

*Based on a capacity of 780,000 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 $182 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			$	585
Variable cost per unit:
Cost of the screen	$	182
Variable cost of electronic parts		233
Total variable cost				415
Contribution margin				170
Fixed costs per unit				86	*
Net operating income per unit			$	84

*Based on a capacity of 190,000 units per year.

The Quark Division has an order from an overseas source for 5,000 HDTVs. The overseas source wants to pay only $392 per unit.

Required:

1. Assume the Quark Division has enough idle capacity to fill the 5,000-unit order. Is the division likely to accept the $392 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 $392 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 $392 unit price.