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Ch. 12 - Michelin manufactures tires for cars and trucks. Michelin has the capacity to produce a particular tire they manufacture for compact vehicles of
Ch. 12 - Michelin manufactures tires for cars and trucks. Michelin has the capacity to produce a particular tire they manufacture for compact vehicles of 200,000 tires which sell for $99 per tire. During the month of December, Michelin expects costs to be as follows Direct materials $ 33 Direct labor $ 12 Manufacturing overhead (30% variable and 70% $ 20 unavoidable fixed) Michelin has received a special order from a customer in Korea for 45,000 tires. Because these tires would have to be shipped overseas, additional shipping costs of $10 would be incurred by Michelin. Michelin currently sells 145,000 of this tire globally. For Michelin, direct materials, direct labor, and variable overheard are avoidable costs in this decision. Fixed overhead is unavoidable and would be incurred regardless of the decision. What is Michelin's minimum selling price for the special order
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