Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5 10 point Poloski Company manufactures and tells a single product called o Ret Operating or capacity, the company can produce and stell 44,000 Rets

image text in transcribed
image text in transcribed
5 10 point Poloski Company manufactures and tells a single product called o Ret Operating or capacity, the company can produce and stell 44,000 Rets per year. Costs associated with this level of production and sales are as follows: Unit Total Direct materials $21.50 $946,000 Direct Labour 14.50 638,000 Variable manufacturing overhead 9.50 418,000 Fixed manufacturing overhead 15.50 682,000 Variable selline expense 4.00 176,000 Fixed selling expense 6.00 264.000 Total cost $71.00 $3,124,000 The Rets normally sell for $76 each. Fixed manufacturing overhead is constant at $682,000 per year within the range of 26.000 through 44,000 Rets per year Required: 1. Assume that due to a recession Poloski Company expects to sell only 26,000 Rets through regular channels next year A large retall chain has offered to purchase 18,000 Rets if Polask is willing to accept a price lower than the regular $76. 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 retail chain's name on the 18,000 units. This machine would cost $36.000. Polski Company has no assurance that the retail chain will purchase additional units any time in the future. Determine the maximum discount that Polesk can offer to this lorge retail chain in order for it to be no worse off compared to its current profit. (Do not round intermediate calculations. Round your percentage answer to nearest whole number) Maximum discount 2. Refer to the original data. Assume again that Polaski Company expects to sell only 26,000 Rets through regular channels next year The Canadian Forces would like to make a one-time-only purchase of 18,000 Rets. The Forces would pay a fixed fee of $2.70 per Ret, and in addition would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Since the Forces would pick up the Rets with its own trucks, there would be no variable selling expenses of any type associated with the order if Polaski Company accepts this order by how much will profits be increased or decreased for the year? (Do not round intermediate calculations.) Answer is complete and correct. S. 327.000 Net increase 3. Assume again that Poloski Company expects to sell only 44,000 Rets through regular channels next year. The Canadian Forces would like to make a one-time-only purchase of 18,000 Rets. The Forces would pay a fixed fee of $2.70 per Ret, and in addition would reimburse Poloski Company for all costs of production (variable and fixed) associated with the units. Thus, accepting the Canadian Forces order would require giving up regular sales of 18,000 Rets. Since the Forces would pick up the Rets with its own trucks, there would be no variable selling expenses of any type associated with this order. Compute the minimum fixed fee per unit thot Poloski must receive from the Canadian Forces (in addition to the reimbursement of production costs) in order to accept this order (Do not round Intermediate calculations 3 Answer is complete but not entirely correct. $149.4003 Minimum fixed to per unit in addition to the reimbursement of production cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting

Authors: Edward B. Deakin, Michael Maher

3rd Edition

0256069190, 978-0256069198

More Books

Students also viewed these Accounting questions