Decision on Accepting Additional Business

Brightstone Tire and Rubber Company has capacity to produce 264,000 tires. Brightstone presently produces and sells 202,000 tires for the North American market at a price of $106 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 31,000 tires for $89.8 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:

Decision on Accepting Additional Business Brightstone Tire and Rubber Company has capacity to produce 264,000 tires. Brightstone presently produces and sells 202,000 tlres for the North Amerlcan market at a price of $106 per tire. Brightstone is evaluating a speclal order from a European automoblle company, Euro Motors. Euro Is offering to buy 31,000 tires for $89.8 per tire. Brightstone's accounting system Indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (70% variable) Selling and administrative expenses (40% variable) Total $40 15 24 21 $100 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this speclal order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additlonal shipping cost of $6 per tire. In addition, Euro has made the order conditlonal on recelving European safety certification. Brightstone estlmates that this certification would cost s173,600 a. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. If an amount is zero, enter zero "0". If required round interim calculations to two decimal places Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) January 2:1 Reject Order Accept Order Differential Effect (Alternative 1) (Alternative 2) on Income (Alternative 2) Revenues Costs: Direct materials Direct labor Variable factory overhead Variable selling and admin. expenses Shipping costs Certification costs Income (Loss) Determine whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. b. What is the minimum price per unit that would be financially acceptable to Brightstone? Round your answer to two decimal places. per unit