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3 10.00 points Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36,000 Rets
3 10.00 points Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36,000 Rets per year. Costs associated wth this level of production and sales are given below $15 10 540,000 360,000 108,000 252,000 144,000 216,000 Direct materials Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost $45 1,620,000 The Rets normally sell for $50 each. Fixed manufacturing overhead is constant at $252,000 per year within the range of 30,000 through 36,000 Rets per year 1. Assume that due to a recession, Polaski Company expects to sell only 30,000 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 pnce 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. Polaski Company has no assurance that the retail chain will purchase the impact on pronts next year if this special order is additional units in the future. Determine
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