Decision on Accepting Additional Business

Brightstone Tire and Rubber Company has capacity to produce 145,000 tires. Brightstone presently produces and sells 111,000 tires for the North American market at a price of $95 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 17,000 tires for $77.05 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:

Direct materials	$36
Direct labor	13
Factory overhead (60% variable)	22
Selling and administrative expenses (40% variable)	19
Total	$90

Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $85,000.

a. Prepare a differential analysis dated January 21 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2). If an amount is zero, enter zero "0". If required, round interim calculations to two decimal places. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
January 21
	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effects (Alternative 2)
Revenues	$fill in the blank 7b8707032fa000c_1	$fill in the blank 7b8707032fa000c_2	$fill in the blank 7b8707032fa000c_3
Costs:
Direct materials	fill in the blank 7b8707032fa000c_4	fill in the blank 7b8707032fa000c_5	fill in the blank 7b8707032fa000c_6
Direct labor	fill in the blank 7b8707032fa000c_7	fill in the blank 7b8707032fa000c_8	fill in the blank 7b8707032fa000c_9
Variable factory overhead	fill in the blank 7b8707032fa000c_10	fill in the blank 7b8707032fa000c_11	fill in the blank 7b8707032fa000c_12
Variable selling and admin. expenses	fill in the blank 7b8707032fa000c_13	fill in the blank 7b8707032fa000c_14	fill in the blank 7b8707032fa000c_15
Shipping costs	fill in the blank 7b8707032fa000c_16	fill in the blank 7b8707032fa000c_17	fill in the blank 7b8707032fa000c_18
Certification costs	fill in the blank 7b8707032fa000c_19	fill in the blank 7b8707032fa000c_20	fill in the blank 7b8707032fa000c_21
Profit (loss)	$fill in the blank 7b8707032fa000c_22	$fill in the blank 7b8707032fa000c_23	$fill in the blank 7b8707032fa000c_24

Determine whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors.

b. What is the minimum price per unit that would be financially acceptable to Brightstone? Round your answer to two decimal places. $fill in the blank 3c4e68f34fa1ff6_2per unit