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please show work! Polaski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 32,000 Rets
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Polaski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 32,000 Rets per year. Costs assoclated with this level of production and sales are given below. The Rets normally sell for $51 each. Fixed manufacturing overhead is $160,000 per year within the range of 27,000 through 32,000 Rets per year Required: 1. Assume that due to a recession, Polaski Company expects to sell only 27,000 Rets through regular channels next year A large retall chain has offered to purchase 5,000 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 speclal machine to engrave the retall chain's name on the 5,000 units. This machine would cost $10,000. Polaski company has no assurance that the retail chain wil purchase additional units in the future What is the financial advantage (disadvantage) of accepting the special order? (Round your intermedlate calculations to 2 decimal places.) 2. Refer to the onginal data. Assume again that Polaski Company expects to sell only 27,000 Rets through regular channels next year The US. Army would like to make a one-time-only purchase of 5,000 Rets. The Army would reimburse Polaski for all of the varlable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $120 per unit Because the army would pick up the Rets with its own trucks, there would be no varlable selling expenses associated with this order What is the financlal 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 32,000 Rets through regutar channels next yeat Thus, accepting the US. Army's order would require giving up regular sales of 5,000 Rets. Given this new information, what is the financlal advantage (disadvantage) of accepting the US. Army's special order Step by Step Solution
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