eBook Show Me How Print Item 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 $106 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $88.6 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $40 Direct labor 15 Factory overhead (70% variable) 24 Selling and administrative expenses (40% variable) 21 Total $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 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 $6 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $112,000. 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 21 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 6f2477f96f85f8c_1 $fill in the blank 6f2477f96f85f8c_2 $fill in the blank 6f2477f96f85f8c_3 Costs: Direct materials fill in the blank 6f2477f96f85f8c_4 fill in the blank 6f2477f96f85f8c_5 fill in the blank 6f2477f96f85f8c_6 Direct labor fill in the blank 6f2477f96f85f8c_7 fill in the blank 6f2477f96f85f8c_8 fill in the blank 6f2477f96f85f8c_9 Variable factory overhead fill in the blank 6f2477f96f85f8c_10 fill in the blank 6f2477f96f85f8c_11 fill in the blank 6f2477f96f85f8c_12 Variable selling and admin. expenses fill in the blank 6f2477f96f85f8c_13 fill in the blank 6f2477f96f85f8c_14 fill in the blank 6f2477f96f85f8c_15 Shipping costs fill in the blank 6f2477f96f85f8c_16 fill in the blank 6f2477f96f85f8c_17 fill in the blank 6f2477f96f85f8c_18 Certification costs fill in the blank 6f2477f96f85f8c_19 fill in the blank 6f2477f96f85f8c_20 fill in the blank 6f2477f96f85f8c_21 Income (Loss) $fill in the blank 6f2477f96f85f8c_22 $fill in the blank 6f2477f96f85f8c_23 $fill in the blank 6f2477f96f85f8c_24 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 94b0bb07c03c035_2per unit

eBook Show Me How Print Item 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 $106 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $88.6 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $40 Direct labor 15 Factory overhead (70% variable) 24 Selling and administrative expenses (40% variable) 21 Total $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 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 $6 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $112,000. 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 21 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 6f2477f96f85f8c_1 $fill in the blank 6f2477f96f85f8c_2 $fill in the blank 6f2477f96f85f8c_3 Costs: Direct materials fill in the blank 6f2477f96f85f8c_4 fill in the blank 6f2477f96f85f8c_5 fill in the blank 6f2477f96f85f8c_6 Direct labor fill in the blank 6f2477f96f85f8c_7 fill in the blank 6f2477f96f85f8c_8 fill in the blank 6f2477f96f85f8c_9 Variable factory overhead fill in the blank 6f2477f96f85f8c_10 fill in the blank 6f2477f96f85f8c_11 fill in the blank 6f2477f96f85f8c_12 Variable selling and admin. expenses fill in the blank 6f2477f96f85f8c_13 fill in the blank 6f2477f96f85f8c_14 fill in the blank 6f2477f96f85f8c_15 Shipping costs fill in the blank 6f2477f96f85f8c_16 fill in the blank 6f2477f96f85f8c_17 fill in the blank 6f2477f96f85f8c_18 Certification costs fill in the blank 6f2477f96f85f8c_19 fill in the blank 6f2477f96f85f8c_20 fill in the blank 6f2477f96f85f8c_21 Income (Loss) $fill in the blank 6f2477f96f85f8c_22 $fill in the blank 6f2477f96f85f8c_23 $fill in the blank 6f2477f96f85f8c_24 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 94b0bb07c03c035_2per unit

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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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 $106 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 20,000 tires for $88.6 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:

Direct materials	$40
Direct labor	15
Factory overhead (70% variable)	24
Selling and administrative expenses (40% variable)	21
Total	$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 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 $6 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $112,000.

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 21
	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank 6f2477f96f85f8c_1	$fill in the blank 6f2477f96f85f8c_2	$fill in the blank 6f2477f96f85f8c_3
Costs:
Direct materials	fill in the blank 6f2477f96f85f8c_4	fill in the blank 6f2477f96f85f8c_5	fill in the blank 6f2477f96f85f8c_6
Direct labor	fill in the blank 6f2477f96f85f8c_7	fill in the blank 6f2477f96f85f8c_8	fill in the blank 6f2477f96f85f8c_9
Variable factory overhead	fill in the blank 6f2477f96f85f8c_10	fill in the blank 6f2477f96f85f8c_11	fill in the blank 6f2477f96f85f8c_12
Variable selling and admin. expenses	fill in the blank 6f2477f96f85f8c_13	fill in the blank 6f2477f96f85f8c_14	fill in the blank 6f2477f96f85f8c_15
Shipping costs	fill in the blank 6f2477f96f85f8c_16	fill in the blank 6f2477f96f85f8c_17	fill in the blank 6f2477f96f85f8c_18
Certification costs	fill in the blank 6f2477f96f85f8c_19	fill in the blank 6f2477f96f85f8c_20	fill in the blank 6f2477f96f85f8c_21
Income (Loss)	$fill in the blank 6f2477f96f85f8c_22	$fill in the blank 6f2477f96f85f8c_23	$fill in the blank 6f2477f96f85f8c_24

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 94b0bb07c03c035_2per unit

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