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Polask 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

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Polask 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 ht Total Direct materiais 50 300, Direct Tabor 320,00 Variable manufacturing overhead 1 120,000 Fixed manufacturing the 5 200,000 Variable selline se 4 100,000 bedste 5 200,000 Total cost 5.46 53,140,00 The Rets normally set for 55t voch Fixed manufacturing overhead is $200,000 per year within the range of 33,000 through 40,000 Rets per year Required: 1. Assume that due to a recession Poloski Company expects to sell only 33,000 Rets through regular channels next year. A large retal choin has offered to purchase 7.000 Rete i Polski is willing to accept o 16% discount off the regular price. There would be no sales commissions on this order, thus, variable selling expenses would be sloshed by 75%. However Polosk Company would have to purchase a special machine to engrave the retail chain's name on the 7000 units. This machine would cost $14.000, Polaski Company hos 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 da Assume again that Polak Company expects to sell only 33.000 Rets through regular channels next year The US Army would like to make a one-time only purchase of 7000 Rets The Army would reimburse Polask 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 $150 per unit. Because the army would pick up the Rets with its own trucks there would be noviable selling expenses associated with this order. What is the financial advantage disadvantages 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 regular channels next year. Thus, accepting the US Army's order would require giving up regular sales of 7,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the US Army's special order? 1 2 13

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