Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need answer as soon as possible Problem 9-5 Determining Whether to Accept or Reject a Special Order (L01 - CC5) Polaski Company manufactures and sells
need answer as soon as possible
Problem 9-5 Determining Whether to Accept or Reject a Special Order (L01 - CC5) Polaski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 26.000 Rets per year Costs associated with this level of production and sales are as follows Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit Total $17.00 $442,000 10.00 260,000 5.00 130,000 11.00 286,000 4.00 104.000 6.00 150.000 $59.00 $1,378,000 The Rets normally sell for $58 each. Fixed manufacturing overhead is constant at $286.000 per year within the range of 17000 through 26,000 Rets per year Required: 1. Assume that, due to a recession, Polski Company expects to sell only 17000 Rets through regular channels next year. A large retail chain has offered to purchase 9.000 Rets if Polaski is willing to accept a price lower than the regular $58. There would be no sales commissions on this order thus, variable selling expenses would be slashed by 75% However, Potaski 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 Polski Company has no assurance that the retail chain will purchase additional units any time in the future. Determine the maximum discount that Polaski can offer to this large retail chain in order for it to be no worse off compared to its current proft (Do not round intermediate Requirea 1. Assume that due to a recession, Polaski Company expects to sell only 17,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is willing to accept a price lower than the regular $58. 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 any time in the future Determine the maximum discount that Polaski can offer to this large 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 17,000 Rets through regular channes next yeat. The Canadian Forces would like to make a one-time-only purchase of 9,000 Rets. The Forces would pay a fixed fee of $160 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 this order. If Polaski Company accepts this order by how much will profits be increased or decreased for the year? (Do not round intermediate calculations.) in profits 3. 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 9,000 Rets, The Forces would pay a fixed fee of $1.60 per Ret, and in addition would reimburse Polaski 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 9,000 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 that Polski 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.) Minimum fuced fee per unit in addition to the reimbursement of production cost Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started