Decision on Accepting Additional Business

Brightstone Tire and Rubber Company has capacity to produce128,000 tires. Brightstone presently produces and sells 98,000tires for the North American market at a price of $109 per tire.Brightstone is evaluating a special order from a Europeanautomobile company, Euro Motors. Euro is offering to buy 15,000tires for $92.55 per tire. Brightstone's accounting systemindicates that the total cost per tire is as follows:

Direct materials	$41
Direct labor	15
Factory overhead (70% variable)	25
Selling and administrative expenses (40% variable)	22
Total	$103

Brightstone pays a selling commission equal to 5% of the sellingprice on North American orders, which is included in the variableportion of the selling and administrative expenses. However, thisspecial order would not have a sales commission. If the order wasaccepted, the tires would be shipped overseas for an additionalshipping cost of $6 per tire. In addition, Euro has made the orderconditional on receiving European safety certification. Brightstoneestimates that this certification would cost $87,000.

a. Prepare a differential analysis datedJanuary 21 on whether to reject (Alternative 1) or accept(Alternative 2) the special order from Euro Motors. If an amount iszero, enter zero "0". If required, round interim calculations totwo decimal places.

Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
January 21
	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effect 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 thatwould be financially acceptable to Brightstone? Round your answerto two decimal places.
$per unit