Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 119,000 tires. Miramar presently produces and sells 91,000 tires for the North American market at a price of $104.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 14,000 tires for $86.60 per tire Miramar's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (70% variable) Selling and administrative expenses (30% variable) Total $40 15 24 21 $100 Miramar pays a sales commission equal to 5% of the selling price on North American orders which is included in the variable portion of these in an 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 $6.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilian safety certification. Rio estimates that this certification would cost Miramar Tire $77,000