7 Polaski 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 given below: THAT $800,000 Unit Direct materials Direct labor 330,000 Variable facturing overhead 130,000 Fixed wasofacturing overhead 200,000 4 160,000 240,000 ences Variable selling Fised selling Total cost 141,920,000 The Rets normally sell for $53 each. Fixed manufacturing overhead is $280,000 per year within the range of 34,000 through 40,000 Rets per year Required 1. Assume that due to a recession, Polaski Company expects to sell only 34,000 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, 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 6,000 units. This machine would cost $12,000. Polaski 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? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume again that Polaski Company expects to sell only 34,000 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 reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1.40 per unit. 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 (disadvantage) of accepting the US Army's special order? 1-2