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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
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 automobile company, 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) 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. If the order was accepted, 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: Prepare a ter dated July 31 on whether to reject (Alternative 1) or accept (Alternative 2) the special order to Autobahn Motors Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for extentes for ho w you must enter subtracted or negative numbers use a minus sign it there is no amount or an amount is er automatically appear it required Question not attempted. Differential Analysis Score: 0/143 Reject (Alternative 1) or Accept (Alternative 2) Order July 31 Reject Order Accept Order Differential Effect on Income Alternative 2) (Alternative 1) (Alternative 2) bel Points: Feedba Check My Work
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