Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following data apply for sales to regular customers:

Sales price - $108 per tire

Direct materials - $20 per tire

Direct manufacturing labor - $6 per hour (2 tires per hour can be produced)

Variable manufacturing overhead - $6 per tire

Manufacturing overhead - $12,000 per month

Required

1.Is the company making a profit on 1,000 tires? What is the profit or loss per tire?

2.The company has decided to produce 3,000 tires; calculate the total profit or loss.What is the profit or loss per tire?

3.Comment on why the profit or loss per tire is different between Requirement 1 and Requirement 2.