etmeducation.com/vod/map/indexht concernal browser douchewed ch13 Hw 7 Problem 13-22 (Algo) Special Order Decisions (LO13-4) 10 points 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 co $20 0.000 References Direct materials Direct labor Variable sanufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost 3 5 4 6 5.46 Total 800, 320,00 120.ee 200.000 160,00 2.40.000 $ 1,840,000 The Rets normally sell for $51 each. Fixed manufacturing overhead is $200,000 per year within the range of 31,000 through 40,000 Rets per year Required: 1. Assume that due to a recession, Polaski Company expects to sell only 31,000 Rets through regular channels next year. A large retail chain has offered to purchase 9.000 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 9.000 units. This machine would cost $18.000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantages 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 31,000 Rets through regular channels next year The US Army would like to make a onetime only purchase of 9.000 Rets. The Aimy 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 $1.80 per unit. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with the nader What is the financial arhvantare tricarluantanal nf acrenting the lis Armu's checial cor Car exto heation.com/ext/m Vinddechtml?con conexetal bowelchidhet2512527052Fwwconnectedcat.com/ ch13 HW 7 10 points accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Poloski Company expects to sell only 31,000 Rets through regular channels ne The U.S. Army would like to make a one-time only purchase of 9,000 Rets. The Army would reimburse Polask for all of the vam and fixed production costs assigned to the units by the company's absorption costing system. plus it would pay an additional $1.80 per unit. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses ass 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 40,000 Rets through regula next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 9.000 Rets. Given this new informa is the financial advantage (disadvantage) of accepting the US Army's special order? eBook Hint References 1. 2 3 Financial advantage Financial (disadvantage)
