10 Check my work 5 Problem 12-22 Special Order Decisions [LO12-4] Polaskl Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 40,000 Rets per year. Costs associated with this level of production and sales are glven below 10 points Unit s 28 18 Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost $ 80e,888 488,888 128,8e8 368,888 88,888 248,888 $ 2,ee,8ee eBook $ 58 Print The Rets normally sell for $55 each. Fixed manufacturing overhead Is $360,000 per year within the range of 34,000 through 40,000 Rets per year. References Requlred 1. Assume that due to a recession, Polaskl Company expects to sell only 34,000 Rets through regular channels next year. A large retall chain has offered to purchase 6,000 Rets if Polaskl Is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retall chain's name on the 6,000 units. This machine would cost $12,000. Polaskl Company has no assurance that the retall chaln will purchase additional units In the future. What is the financial advantage (disadvantage) of accepting the speclal order? 2. Refer to the original data. Assume agaln that Polaskl Company expects to sell only 34,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 6,000 Rets. The Army would pay a fixed fee of $1.60 per Ret, and it would relmburse Polaskl Company for all costs of production (variable and fixed) associated with the unlts. Because the army would pick up the Rets with Its own trucks, there would be no varlable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's speclal order? 3. Assume the same sltuation as described In (2) above, except that the company expects to sell 40,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 6,000 Rets. Given this new Information, what is the financlal advantage (disadvantage) of accepting the U.S. Army's special order