tavos Company’s Screen Division manufactures a standard screen for high-definition televisions (HDTVs). The cost per scr

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tavos Company’s Screen Division manufactures a standard screen
for high-definition televisions (HDTVs). The cost per screen
is:
*Based on a capacity of 790,000 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 $192 per screen for all sales.
The net operating income associated with the Quark Division’s
HDTV is computed as follows:
*Based on a capacity of 180,000 units per year.
The Quark Division has an order from an overseas source for
4,700 HDTVs. The overseas source wants to pay only $405 per
unit.
Required:
1. Assume the Quark Division has enough idle capacity to fill
the 4,700-unit order. Is the division likely to accept the $405
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 $405
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 $405 unit price?