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Polaska Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 42,000 Rets per year. Costs

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Polaska Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 42,000 Rets per year. Costs associated with this level of production and sales are given below: The Rets normally sell for $51 each. Flxed manufacturing overhead is $294,000 per year within the range of 34,000 through 42,000 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 hos offered to purchose 8,000 Rets if Polaski is wiling to accept a 16% discount off the regular price. There would be no sales commissions on this order, thus, varlable selling expenses would be slashed by 75%. However, Polaskl Company woulid have to purchase a special machine to engrave the retall 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. What is the financial advantage (disadvantage) of accepting the special order? (Round your Intermedlate 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-tme-only purchase of 8,000 Rets. The Army would reimburse Polaski for all of the varrable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1.40 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 financlal advantage \{disadvantage) of accepting the U.S. Army's speclal order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 42,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would requlre giving up regular sales of 8,000 Rets. Given this new informavon, what Is the financial advantage (disadvantage) of accepting the U.S. Army's special order

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