Talladega Tire and Rubber Company has capacity to produce 187.000 tires. Tafadega presently produces and sois 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 oftening to buy 15,100 tires for $119.68 per tire. Talladega's accounting system indicates that the total cost per tire is as follows: Direct materials $57 Direct Inbor 23 Factory overhead (58% variable) 27 Seling and administrative expenses (43% variable) 25 Total $132 Taladega pays a rolling commission equal to 4% of the selling price on North American orders, is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. 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 cortification. Taladega estimates that this certification would cost 5127,293 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 dists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in winch you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "O". A colon () will automatically appear if required. b. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Autobahri Motors c. What is the minimum price per unit that would be financially acceptable to Talladega? Round your answer to two decimal places. Labels and Amount Descriptions Labels Cash flows from investing activities Costs Amount Descriptions Certification costs Direct labor Direct materials Gain on sale of investments Income (loss) Loss on sale of investments Revenues Shipping costs Variable factory overhead Variable selling and administrative expenses Differential Analysis Score: 47/143 Reject (Alternative 1) or Accept (Alternative 2) Order July 31 Reject Order Accept Order Differential Effect on Income (Alternative 1) (Alternative 2) (Alternative 2) $ Revenues Costs: Direct materials 6 Direct labor 7 Variable factory overhead 18 Variable selling and administrative expenses Shipping costs 19 10 Certification costs 11 Income (Loss) b. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors. The company is Indifferent since the result is the same regardless of which alternative is chosen. Reject Accept Points: 0/1 c. What is the minimum price per unit that would be financially acceptable to Talladega? Round your answer to two decimal places. Points: 0/1
