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Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 196,000 tires. Miramar presently produces and sells 150,000 tires for the North American market at a price of $95.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 23,000 tires for $75.75 per tire. Miramar's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (60% variable) $36 13 22 Selling and administrative expenses (30% variable) 19 Total $90 Miramar pays a sales 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 $5.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilian safety certification. Rio estimates that this certification would cost Miramar Tire $115,000. a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report

Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 196,000 tires. Miramar presently produces and sells 150,000 tires for the North American market at a price of $95.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 23,000 tires for $75.75 per tire. Miramar's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (60% variable) $36 13 22 Selling and administrative expenses (30% variable) 19 Total $90 Miramar pays a sales 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 $5.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilian safety certification. Rio estimates that this certification would cost Miramar Tire $115,000. a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 15E
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Safety CCra 1. RIO CStimates that this certification would cost Partial THE a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report Differential revenue from accepting special offer Differential costs from accepting special offer: (Enter per unit cost amounts as positive values; enter the per unit cost savings as a negative value). Direct materials Direct labor Variable factory overhead Variable selling and administrative Less avoided sales commission Additional shipping costs Variable special offer product cost Incremental certification costs Total differential costs Differential income from accepting special order Feedback Per Unit Total $ 0000
Transcribed Image Text:Safety CCra 1. RIO CStimates that this certification would cost Partial THE a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report Differential revenue from accepting special offer Differential costs from accepting special offer: (Enter per unit cost amounts as positive values; enter the per unit cost savings as a negative value). Direct materials Direct labor Variable factory overhead Variable selling and administrative Less avoided sales commission Additional shipping costs Variable special offer product cost Incremental certification costs Total differential costs Differential income from accepting special order Feedback Per Unit Total $ 0000
....... Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 196,000 tires. Miramar presently produces and sells 150,000 tires for the North American market at a price of $95.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 23,000 tires for $75.75 per tire. Miramar's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (60% variable) $36 13 22 Selling and administrative expenses (30% variable) 19 $90 < Total Miramar pays a sales 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 $5.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilian safety certification. Rio estimates that this certification would cost Miramar Tire $115,000. a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report Per Unit Total jpe 1000 F 3 EDGE peg
Transcribed Image Text:....... Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 196,000 tires. Miramar presently produces and sells 150,000 tires for the North American market at a price of $95.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 23,000 tires for $75.75 per tire. Miramar's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (60% variable) $36 13 22 Selling and administrative expenses (30% variable) 19 $90 < Total Miramar pays a sales 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 $5.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilian safety certification. Rio estimates that this certification would cost Miramar Tire $115,000. a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report Per Unit Total jpe 1000 F 3 EDGE peg
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