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1. Assume the Quark Division has enough idle capacity to fill the 5,300-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?

1. Assume the Quark Division has enough idle capacity to fill the 5,300-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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Assume the Quark Division has enough idle capacity to fill the 5,300-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?

Problem 11-23 (Algo) Market-Based Transfer Price [LOo11-3] Stavos Company's Screen DIvision manufactures a standard screen for high-definition televisions (HDTVS). The cost per screen is: Variable cost per screen $ 120 Fixed cost per scCreen 34* Total cost per screen $ 154 *Based on a capacity of 780,000 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 assoclated with the Quark Division's HDTV Is computed as follows: $ 579 Selling price per unit Variable cost per unit: Cost of the screen $192 Variable cost of electronic parts 236 Total variable cost 428 Contribution margin Fixed costs per unit 151 88* Net operating income per unit 63 *Based on a capacity of 180,000 units per year. The Quark Division has an order from an overseas source for 5,300 HDTVS. The overseas source wants to pay only $405 per unit.
Transcribed Image Text:Problem 11-23 (Algo) Market-Based Transfer Price [LOo11-3] Stavos Company's Screen DIvision manufactures a standard screen for high-definition televisions (HDTVS). The cost per screen is: Variable cost per screen $ 120 Fixed cost per scCreen 34* Total cost per screen $ 154 *Based on a capacity of 780,000 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 assoclated with the Quark Division's HDTV Is computed as follows: $ 579 Selling price per unit Variable cost per unit: Cost of the screen $192 Variable cost of electronic parts 236 Total variable cost 428 Contribution margin Fixed costs per unit 151 88* Net operating income per unit 63 *Based on a capacity of 180,000 units per year. The Quark Division has an order from an overseas source for 5,300 HDTVS. The overseas source wants to pay only $405 per unit.
Required: 1. Assume the Quark Division has enough idle capacity to fill the 5,300-unit order. Is the division likely to accept the $405 price or to reject it? 2 Assume both the Screen Division and the Quark DVIsion 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 DMision rejects the $405 price? 3. Assume the Quark Division has ldle 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 basıs) if the Quark Division accepts the $405 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 5,300-unit order. Is the division likely to accept the 5405 price or to reject it? Reject Accept < Required 1 Required 2 > 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 $405 price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Financial advantage (disadvantage) on a per unit basis < Required 1 Required 3 Complete this question by entering your answers in the tabs below. 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 $405 unit price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Show less a Financial advantage (disadvantage) on a per unit basis < Required 2 Required 3
Transcribed Image Text:Required: 1. Assume the Quark Division has enough idle capacity to fill the 5,300-unit order. Is the division likely to accept the $405 price or to reject it? 2 Assume both the Screen Division and the Quark DVIsion 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 DMision rejects the $405 price? 3. Assume the Quark Division has ldle 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 basıs) if the Quark Division accepts the $405 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 5,300-unit order. Is the division likely to accept the 5405 price or to reject it? Reject Accept < Required 1 Required 2 > 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 $405 price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Financial advantage (disadvantage) on a per unit basis < Required 1 Required 3 Complete this question by entering your answers in the tabs below. 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 $405 unit price? (Any "Financial Disadvantage" amounts should be entered as a negative.) Show less a Financial advantage (disadvantage) on a per unit basis < Required 2 Required 3
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