Hi. I've already gotten this problem right, I just need help on understanding it a little bit more. I've posted the screenshot of the explanation of the problem. I just don't understand where do you get the (84%) on the sales from order part. and where do you get the (25%) part on the variable selling expense as well.

I have no idea where those numbers had come from. Can you help me please in understanding this. Thanks.

Award: 10 out of 10.00 points Show correct answer 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 with this level of production and sales are given below: Unit Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense $20 $ 720,000 360,000 108,000 180,000 72,000 216,000 10 2 6 Total cost $46 $1,656,000 The Rets normally sel for $51 each. Fixed manufacturing overhead is constant at $180,000 per year within the range of 28,000 through 36,000 Rets per year Required 1. Assume that due to a recession, Polaski Company expects to sell only 28,000 Rets through regular channels next year. A large retail chain has offered to purchase 8,000 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 8,000 units. This machine would cost $16,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. Determine the impact on profits next year if this special order is accepted Net profit increases by 58,720