Posted: June 15th, 2022

Brightstone Tire and Rubber Company has capacity to produce

Brightstone Tire and Rubber Company has capacity to produce 177,500 tires. Brightstone presentlyproduces and sells 130,500 tires for the North American market at a price of $178 per tire. Brightstoneis evaluating a special order from a European automobile company, Euro Motors. Euro is offering tobuy 19,600 tires for $116.62 per tire. Brightstone’s accounting system indicates that the total cost pertire is as follows:Direct materials$54Direct labor24Factory overhead (62% variable)24Selling and administrative expenses (44% variable)25Total$127.00Brightstone pays a selling commission equal to 4% of the selling price on North American orders, whichis included in the variable portion of the selling and administrative expenses. However, this specialorder would not have a sales commission. If the order was accepted, the tires would be shippedoverseas for an additional shipping cost of $7.65 per tire. In addition, Euro has made the orderconditional on receiving European safety certification. Brightstone estimates that this certificationwould cost $165,424.Required:A. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept(Alternative 2) the special order from Euro Motors. Refer to the lists of Labels and AmountDescriptions for the exact wording of the answer choices for text entries. For those boxes in whichyou must enter subtracted or negative numbers use a minus sign. If there is no amount or anamount is zero, enter "0". A colon (:) will automatically appear if required.B. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the specialorder from Euro MotorsC. What is the minimum price per unit that would be financially acceptable to Brightstone?

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