Question: Assignment 1 ANSWER BOTH THE FOLLOWING QUESTIONS AS DIRECTED. BOTH QUESTIONS CARRY EQUAL MARKS. Question 1 (CLO 31 Tire Ready Tire Co. sells tires. A

Assignment 1 ANSWER BOTH THE FOLLOWING QUESTIONS AS DIRECTED. BOTH QUESTIONS CARRY EQUAL MARKS. Question 1 (CLO 31 Tire Ready Tire Co. sells tires. A partial income statement for a typical month is given below. $ Sales (10,000 tires) 100,000 Costs: Direct Materials Direct Labor Overhead (50% variable) 56,000 Gross Profit $ 20,000 16,000 20,000 $ 44.000 A local car dealer has offered to buy 500 tires for an upcoming promotion to launch the new line of sports cars he will carry. Although the normal selling price is $10 per tire, the dealer has offered $8 each, citing the large volume of the order as the reason for cutting the price. There is no change in fixed costs. Required: A) If Ready Tire Co. accepts this order what will be the effect on the company's income, assuming regular sales are unaffected. B) Comment on the fixed overhead of this special order. c) Comment on this scenario of pricing

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