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Decision on Accepting Additional Business Brightstone Tire and Rubber Company has capacity to produce 1 5 3 , 0 0 0 tires. Brightstone presently produces
Decision on Accepting Additional Business
Brightstone Tire and Rubber Company has capacity to produce tires. Brightstone presently produces and sells tires for the North American market at a price of $ per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy tires for $ per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:
Direct materials $
Direct labor
Factory overhead variable
Selling and administrative expenses variable
Total $
Brightstone pays a selling commission equal to 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 $ per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $
Question Content Area
a Prepare a differential analysis dated January on whether to reject Alternative or accept Alternative the special order from Euro Motors. If an amount is zero, enter zero If required, round interim calculations to two decimal places.
Differential Analysis
Reject Order Alt or Accept Order Alt
January
Reject
Order
Alternative Accept
Order
Alternative Differential
Effect
on Income Alternative
Revenues $fill in the blank afafa
$fill in the blank afafa
$fill in the blank afafa
Costs:
Direct materials fill in the blank afafa
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Direct labor fill in the blank afafa
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Variable factory overhead fill in the blank afafa
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Variable selling and admin. expenses fill in the blank afafa
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Shipping costs fill in the blank afafa
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Certification costs fill in the blank afafa
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Income Loss $fill in the blank afafa
$fill in the blank afafa
$fill in the blank afafa
Question Content Area
Determine whether to reject Alternative or accept Alternative 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 ebfffcafa
per unit
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