Clearview Window Company manufactures windows for thehome-building industry. The window frames are produced in the FrameDivision. The frames are then transferred to the Glass Division,where the glass and hardware are installed. The company’sbest-selling product is a three-by-four-foot, doublepaned operablewindow.

The Frame Division also can sell frames directly to custom homebuilders, who install the glass and hardware. The sales price for aframe is $175. The Glass Division sells its finished windows for$510. The markets for both frames and finished windows exhibitperfect competition.

The standard variable cost of the window is detailed asfollows:

	Frame Division					Glass Division
Direct material		$	43				$	67	*
Direct labor			40					43
Variable overhead			67					67
Total		$	150				$	177

*Not including the transfer price for the frame.

Assume that there is no excess capacity in the FrameDivision.

Required:

2-d. The Glass Division has been approached bythe U.S. Army with a special order for 2,300 windows at $352.Assume the transfer price established in requirement 2-c. above isbeing used (which is $220).

i.What is the incremental contribution (loss) per window forClearview Window Company as a whole if this special order isaccepted?

ii.From the perspective of Clearview Window Company as a whole,should the special order be accepted or rejected?

2-e. The Glass Division has been approached bythe U.S. Army with a special order for 2,300 windows at $352.Assume the transfer price established in requirement 2-c. above isbeing used (which is $220).

i. What is the incremental contribution (loss) per window forthe Glass Division if this special order is accepted?

1. ii.Will an autonomous Glass Division manager accept or rejectthe special order?