=+Sure-Grip Tire and Rubber Company has capacity to produce 170,000 tires. Sure-Grip pres ently produces and sells
Question:
=+Sure-Grip Tire and Rubber Company has capacity to produce 170,000 tires. Sure-Grip pres¬
ently produces and sells 130,000 tires for the North American market at a price of $90 per tire.
Sure-Grip is evaluating a special order from a European automobile company, Continental Mo¬
tors. Continental is offering to buy 25,000 tires for $60 per tire. Sure-Grips accounting system indicates that the total cost per tire is as follows:
Direct materials $26 Direct labor 9 Factory overhead (35% variable) 22 Selling and administrative expenses (40% variable) 18 Total $75
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