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Polaski Company manufactures and selis a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per yeat Costs

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Polaski Company manufactures and selis a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per yeat Costs associated with this level of production and sales are given below: The Rets normally sell for $49 each. Fixed manufacturing overthead is $220,000 per year within the range of 37,000 through 44,000 Rets per year. Aequired: 1. Assume that due to a recession, Polaski Company expects to sell only 37,000 Rets through regular channels next year. A large retail chain has offered to purchase 7,000 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 7,000 units. This machine would cost $14,000. Polaski Compary 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 caiculations to 2 decimal places.) 2. Refer to the original data. Assume apain that Polaskl Company expects to sell only 37,000 Rets through regular channels hext year The US. Army would like to make a one-time-only purchase of 7,000 Rets. The Army would reimburse Polaski for all of the variabie and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1.60 per unit. Becouse the army would pick up the Aets with its awn trueks; there would bo no variable selling expenses associated with this order. What is the financial advantage (disadvartage) of accepting the U.S. Army's special crder? 3. Assume the same situation as described in (2) above, except that the compony expects to sell 44,000 Rets througti regular channels next year. Thus, accepting the US. Army's order would require givng up regular sales of 7,000 Rets. Given this new information, what. is the financial advantage (disodvantage) of accepting the US. Ammy's special order

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