Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $116 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $56 Direct labor 22 Factory overhead (60% variable) 25 Selling and administrative expenses (45% variable) 26 Total $129 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 special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $165,000. Question Content Area a. Prepare a differential analysis dated January 21 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2). If an amount is zero, enter zero "0". If required, round interim calculations to two decimal places. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential AnalysisReject Order (Alt. 1) or Accept Order (Alt. 2)January 21 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effects (Alternative 2) Revenues $fill in the blank bb73f7f95fab06f_1 $fill in the blank bb73f7f95fab06f_2 $fill in the blank bb73f7f95fab06f_3 Costs: Direct materials fill in the blank bb73f7f95fab06f_4 fill in the blank bb73f7f95fab06f_5 fill in the blank bb73f7f95fab06f_6 Direct labor fill in the blank bb73f7f95fab06f_7 fill in the blank bb73f7f95fab06f_8 fill in the blank bb73f7f95fab06f_9 Variable factory overhead fill in the blank bb73f7f95fab06f_10 fill in the blank bb73f7f95fab06f_11 fill in the blank bb73f7f95fab06f_12 Variable selling and admin. expenses fill in the blank bb73f7f95fab06f_13 fill in the blank bb73f7f95fab06f_14 fill in the blank bb73f7f95fab06f_15 Shipping costs fill in the blank bb73f7f95fab06f_16 fill in the blank bb73f7f95fab06f_17 fill in the blank bb73f7f95fab06f_18 Certification costs fill in the blank bb73f7f95fab06f_19 fill in the blank bb73f7f95fab06f_20 fill in the blank bb73f7f95fab06f_21 Profit (loss) $fill in the blank bb73f7f95fab06f_22 $fill in the blank bb73f7f95fab06f_23 $fill in the blank bb73f7f95fab06f_24 Question Content Area 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. $fill in the blank 848d4b04ff88fa2_2 per unit

Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $116 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $56 Direct labor 22 Factory overhead (60% variable) 25 Selling and administrative expenses (45% variable) 26 Total $129 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 special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.50 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $165,000. Question Content Area a. Prepare a differential analysis dated January 21 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2). If an amount is zero, enter zero "0". If required, round interim calculations to two decimal places. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential AnalysisReject Order (Alt. 1) or Accept Order (Alt. 2)January 21 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effects (Alternative 2) Revenues $fill in the blank bb73f7f95fab06f_1 $fill in the blank bb73f7f95fab06f_2 $fill in the blank bb73f7f95fab06f_3 Costs: Direct materials fill in the blank bb73f7f95fab06f_4 fill in the blank bb73f7f95fab06f_5 fill in the blank bb73f7f95fab06f_6 Direct labor fill in the blank bb73f7f95fab06f_7 fill in the blank bb73f7f95fab06f_8 fill in the blank bb73f7f95fab06f_9 Variable factory overhead fill in the blank bb73f7f95fab06f_10 fill in the blank bb73f7f95fab06f_11 fill in the blank bb73f7f95fab06f_12 Variable selling and admin. expenses fill in the blank bb73f7f95fab06f_13 fill in the blank bb73f7f95fab06f_14 fill in the blank bb73f7f95fab06f_15 Shipping costs fill in the blank bb73f7f95fab06f_16 fill in the blank bb73f7f95fab06f_17 fill in the blank bb73f7f95fab06f_18 Certification costs fill in the blank bb73f7f95fab06f_19 fill in the blank bb73f7f95fab06f_20 fill in the blank bb73f7f95fab06f_21 Profit (loss) $fill in the blank bb73f7f95fab06f_22 $fill in the blank bb73f7f95fab06f_23 $fill in the blank bb73f7f95fab06f_24 Question Content Area 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. $fill in the blank 848d4b04ff88fa2_2 per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Question Content Area

a. Prepare a differential analysis dated January 21 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2). If an amount is zero, enter zero "0". If required, round interim calculations to two decimal places. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential AnalysisReject Order (Alt. 1) or Accept Order (Alt. 2)January 21

	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effects (Alternative 2)
Revenues	$fill in the blank bb73f7f95fab06f_1	$fill in the blank bb73f7f95fab06f_2	$fill in the blank bb73f7f95fab06f_3
Costs:
Direct materials	fill in the blank bb73f7f95fab06f_4	fill in the blank bb73f7f95fab06f_5	fill in the blank bb73f7f95fab06f_6
Direct labor	fill in the blank bb73f7f95fab06f_7	fill in the blank bb73f7f95fab06f_8	fill in the blank bb73f7f95fab06f_9
Variable factory overhead	fill in the blank bb73f7f95fab06f_10	fill in the blank bb73f7f95fab06f_11	fill in the blank bb73f7f95fab06f_12
Variable selling and admin. expenses	fill in the blank bb73f7f95fab06f_13	fill in the blank bb73f7f95fab06f_14	fill in the blank bb73f7f95fab06f_15
Shipping costs	fill in the blank bb73f7f95fab06f_16	fill in the blank bb73f7f95fab06f_17	fill in the blank bb73f7f95fab06f_18
Certification costs	fill in the blank bb73f7f95fab06f_19	fill in the blank bb73f7f95fab06f_20	fill in the blank bb73f7f95fab06f_21
Profit (loss)	$fill in the blank bb73f7f95fab06f_22	$fill in the blank bb73f7f95fab06f_23	$fill in the blank bb73f7f95fab06f_24

Question Content Area

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.
$fill in the blank 848d4b04ff88fa2_2 per unit