Decision on Accepting Additional Business Assignment

Decision on Accepting Additional Business

Talladega Tire and Rubber Company has capacity to produce 221,000 tires. Talladega presently produces and sells 169,000 tires for the North American market at a price of $114 per tire. Talladega is evaluating a special order from a European automobile company, Autobahn Motors. Autobahn is offering to buy 26,000 tires for $92.8 per tire. Talladega’s accounting system indicates that the total cost per tire is as follows:

Direct materials $43
Direct labor 16
Factory overhead (70% variable) 26
Selling and administrative expenses (30% variable) 23
Total $108

Talladega 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, Autobahn has made the order conditional on receiving European safety certification. Talladega estimates that this certification would cost $156,000.

a. Prepare a differential analysis dated July 31 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors. If an amount is zero, enter “0”. If required, round interim calculations to two decimal places.

Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
July 31
Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2)
Revenues $ $ $
Direct materials
Direct labor
Variable factory overhead
Variable selling and admin. expenses
Shipping costs
Certification costs
Income (Loss) $ $ $


a. Subtract the additional costs (each unit cost multiplied by 26,000 tires) from the additional revenue ($92.8 per tire multiplied by the number of tires in the offer). The variable selling and administrative expenses are 30% of per tire, less 5% of 4 sales commission per unit.

Learning Objective 1.

Determine whether to reject (Alternative 1) or accept (Alternative 2) the special order from Autobahn Motors.
Accept the special order

b. What is the minimum price per unit that would be financially acceptable to Talladega? Round your answer to two decimal places.
$per unit. Get Accounting homework help today

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose HelpHub


Quality Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.


Qualified Writers

We have hired a team of professional writers experienced in academic and business writing. Most of them are native speakers and PhD holders able to take care of any assignment you need help with.


Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account.


On Time Delivery

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. We will always strive to deliver on time.


Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text.


24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Help Hub

Place your order

Fill in the order form and provide all details of your assignment.

Help Hub

Proceed with the payment

Choose the payment system that suits you most.

Help Hub

Receive the final file

Once your paper is ready, we will email it to you.

HelpHub Writing Services

No need to work on essay at night. Sleep tight, we will cover your back. We offer all kinds of essay writing services.

HelpHub HelpHub


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

HelpHub HelpHub


Admission Essays

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

HelpHub HelpHub


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

HelpHub HelpHub


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied.