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$56Direct labor22Factory overhead (60% variable)25Selling and administrative expenses (45% variable)26Total$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 Areaa. 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. 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 21RevenuesCosts:Direct materialsDirect laborVariable factory overheadVariable selling and admin. expensesShipping costsCertification costsProfit (loss)RejectAcceptOrderDifferentialEffectsOrder(Alternative 1) (Alternative 2) (Alternative 2)00000000Determine whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors.Accept the special orderb. What is the minimum price per unit that would be financially acceptable to Brightstone? Round your answer to two decimal places.per unit Decision on Accepting Additional BusinessBrightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American marketat 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 $116per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:Direct materialsDirect laborFactory overhead (60% variable)Selling and administrative expenses (45% variable)Total$5622Revenues2526$129Brightstone 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 andadministrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for anadditional shipping cost of $7.50 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that thiscertification would cost $165,000.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 21RejectAcceptOrderOrder(Alternative 1) (Alternative 2) (Alternative 2)DifferentialEffects

SPECIAL ORDER Untill There is any Information is Provided, There Shall be no additional Fixed…

Decision on Accepting Additional Business 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 Direct labor Factory overhead (60% variable) Selling and administrative expenses (45% variable) Total $56 22 Revenues 25 26 $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. 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 Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) January 21 Reject Accept Order Order (Alternative 1) (Alternative 2) (Alternative 2) Differential Effects

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.

Decision on Accepting Additional Business
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
Direct labor
Factory overhead (60% variable)
Selling and administrative expenses (45% variable)
Total
$56
22
Revenues
25
26
$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.
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 Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
January 21
Reject
Accept
Order
Order
(Alternative 1) (Alternative 2) (Alternative 2)
Differential
Effects

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Direct materials	$56
Direct labor	22
Factory overhead (60% variable)	25
Selling and administrative expenses (45% variable)	26
Total	$129