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11hw5 Polaski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 48000 Rets per year

11hw5
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Polaski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 48000 Rets per year Costs associated with this level of production and sales are given below Unit Total Direct materials 520 5 960,000 Direct labor 10 480,000 Variable manufacturing overhead 144,000 Fixed manufacturint overhead 7 335,000 Variable selling expense 4 192,000 Fixed selling expense 6 288,000 Total cost 5.50 $ 2,400,000 The Rets normally well for $55 each Fixed manufacturing overhead is $336,000 per year within the range of 42.000 through 48.000 Rets per year Required: 1 Assume that due to a recession Polski Company expects to sell only 12.000 Rets through regular channels next year. A large retail chain has offered to purchase 6.000 Retsit Poloski is willing to accept a 16% discount of the regular price. There would be no sales commissions on this order thus, Variable telling expenses would be slashed by 75% However, Polaskt Company would have to purchase a special machine to engrove the retail chain's name on the 6.000 units. This machine would cost $12,000. Polask Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantago) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original dota Assume again that Poloski Company expects to sell only 42,000 Rets through regular channels next year The US Army would like to make a one-time only purchase of 6.000 Rets. The Army would pay a fixed fee of $200 per Ret, and it would reimburse Poloski Company for all costs of production (variable and fixed associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order What is the financial advantage (disadvantages of accepting the US Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 48.000 Rets through regular channels next year. Thus, accepting the US Army order would require giving up regutor sales of 6.000 Rets Given this new information what the financial advantage (disadvantage of accepting the US Army's special order? Required: 1. Assume that due to a recession, Polaski Company expects to sell only 42,000 Rets through regular channels next year A large retail chain has offered to purchase 6.000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order, thus, Vanable selling expenses would be slashed by 75% However, Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 6,000 units. This machine would cost $12,000 Poloski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Polaski Company expects to sell only 42,000 Rets through regular channels next year The US Army would like to make a one-time-only purchase of 6.000 Rets. The Army would pay a fixed fee of $200 per Rot and it would reimburse Poloski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rots with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the US Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 48.000 Rets through regular channels next yeat Thus, accepting the US Army's order would require giving up regular sales of 6,000 Rets Given this new information what is the financial advantage (disadvantage of accepting the US Army's special order? 1

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