A tire company has capacity to produce 170,000 tires. Presently produces and sells 130,000 tires for the North American market at a price of $175. The company is evaluating a special order from a European company . The European company is offering to but 20,000 tires for $116 per tire. The accounting system indicates that the total cost per tire is as listed below.

Direct materials $56

Direct labor 22

Overhead ( 60% variable) 22

Selling and admin expenses (45% variable) 26

Total $129

The company pays a selling commission equal to 5% of the selling price on North American orders, included in the variable portion of the selling and admin expenses. The special order would not have commission. I the special order was accepted, the tires would have to be shipped overseas for an additional shipping cost of $7.50 per tire. the European company has alsomade the order conditional on receiving safety certification estimated at $165,000.

how do I make a differential analysis on whether to reject(alternative 1) or accept (alternative 2)?