Decision on Accepting Additional Business Twadega Tire and Rubber Company has capacity to produce 221,000 tires. Talladege present produces and is 163,000 tires for the North American market at a price of $99 per tire. Twadega is evaluating a special order from a European automobile company, Autobahn Motors Autobahn is offering to buy 26,000 tires for 104.55 per tire. Tallega'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 (40% variable) Total Talladege 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 of the order was accepted the tires would be shipped overseas for an additional shipping cost of $5 per tire. In addition, Autobahn has made the order conditional receiving European safety certification. Talladega estimates that this certification would cost $135,200. a. Prepare a differential analysis dated July 31 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors. If an amount is rero, entero required, round interim calculations to two decimal places. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) ental Effect on Income (Alternative 2) Costs: Direct materials Direct labor Variable factory overhead HW 24 eBook Show Me HON Chico Talladega 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 $5 per tire. In addition, Autobahn has made the order conditional on receiving European safety certification. Talladega estimates that this certification would cost $135,200. a. Prepare a differential analysis dated on whether to reject(Aternative 1) or accept (Alternative 2) the special order from Autobahn Motors. If an amount is rero, enter "0". If required, round Interim calculations to two decimal places Differential Analysis Reject Order (Art. 1) or Accept Order (Alt. 2) uly 31 Perfect Order (Nternative 1) Accept Order (Aheative Differenc e vues Cost: Orect materials Drect labor Variable factory overhead Variable selling and admin. experies Shipping costs Certification costs Income (LSS Determine whether to reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors b. What is the minimum price per unit that would be financial acceptable to Talladega? Hound your answer to two decimal places. per unit
