Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Instructions Labels and Amount Descriptions Instructions Talladega Tire and Rubber Company has capacity to produce 187,000 tires. Talladega presently produces and sells 134,200 tires
Instructions Labels and Amount Descriptions Instructions Talladega Tire and Rubber Company has capacity to produce 187,000 tires. Talladega presently produces and sells 134,200 tires for the North American market at a price of $176 per tire. Talladega is evaluating a special order from a European Autobahn Motors Autobahn is offering to buy 15,100 tires for $119.66 per tire. Talladega's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (58% variable) $57 23 27 Selling and administrative expenses (43% variable) 25 Total $132 Talladega pays a selling commission equal to 4% 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. It the tires would be shipped overseas for an additional shipping cost of $7.73 per tire. In addition, Autobahn has made the order conditional on receiving European safety certification. Talladega estimates that this certification would cost $127,293. Required: a. Prepare a differential analysis dated July 31 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon () will automatically appear if required. b. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors c. What is the minimum price per unit that would be financially acceptable to Talladega? Round your answer to two decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started