nect i 41 es Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $15 Total $ 660,000 352,000 132,000 396,000 88,000 264,000 $43 $ 1,892,000 8 3 Saved 926 The Rets normally sell for $48 each. Fixed manufacturing overhead is $396,000 per year within the range of 34,000 through 44,000 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 10,000 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 10,000 units. This machine would cost $20,000. 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? (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 U.S. Army would like to make a one-time-only purchase of 10,000 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 $2.00 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 U.S. Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 44,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 10,000 Rets. Given this new information, what

Polaski Company manufactures and sells a single product calted a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below: The Rets normally sell for $48 each. Fixed manufacturing overhead is $396,000 per year within the range of 34,000 through 44,000 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 retall chain has offered to purchase 10,000 Rets if Polaskl is willing to accept a 16% discount off the regular price. There would be no saies 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 retall chain's name on the 10,000 units. This machine would cost $20,000. 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? (Round your intermediate calculations to 2 decimol places.) 2. Refer to the original data. Assume again that Polaski Company expects to sell only 34.000 Rets through regular channeis next year: The US. Army would like to make a one-time-only purchase of 10,000 Rets. The Ammy would reimburse Polaskl 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 $200 per unit. Hecause the army would pick up the Rets with its own trucks. there would be no vartable selling expenses associlated with this order What is the financial advantage (disadvantage) of accepting the U.S. Army's speclal order? 3. Assume the samie situation as described in (2) above, except that the company expects to sell 44,000 Rets through ingular chanmels next yeat Thus, accepling the U.S. Army's order would require giving up regulat sales of 10,000 Rets. Given this niew information what 2. Refer to the original data. Assume again that Polaski Company expects to sell only 34,000 Rets through regular channel The U.S. Army would like to make a one-time-only purchase of 10,000 Rets. The Army would reimburse Polaski for all of th and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an adiition $2.00 per unit. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses with this order. What is the financial advantage (dlsadvantage) of accepting the U.S. Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 44,000 Rets through regu next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 10,000 Rets. Given this new inform Is the financial advantage (disadvantage) of accepting the U.S. Army's speclal order