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Polaski Company manufactures and selis a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs
Polaski Company manufactures and selis a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs associated with this level of production and sales are given below: The Rets normally sell for $50 each. Fixed manufocturing overhead is $306,000 per year within the range of 28,000 through 34,000 Rets per year. Required: 1. Assume that due to o recestion, Polaski Company expects to sell only 28,000 Rets through regular channels next year. A large retail chain hos offered to purchase 6,000 Rets if Polaski is willing to occept a 16% discount off the regular price. There would be no soles commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would hove to purchase a special machine to engrave the retal chain's nome on the 6,000 units. This machine would cost $12,000. Polaski Company has no ossurance that the retail chain will purchase odditional units in the future. What is the financial odvantage (disodvantage) of occepting the special order? Note: Round your intermediste calculetions to 2 clecimal places. 2. Refer to the original dota Asnume ogoin that Polaski Compony expects to mell only 28,000 Rets through regular channels next year The US. Army would like to make o one-time-only purchase of 6,000 Rets. The Aimy would reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's obsorption costing system, plus it would pay an additional fee of \$2.00 per unit. Because the army would pick up the Rets with its own trucks. there would be no variable seding annenges oisocloted with this order. What is the financial odvontage (disodvantoge) of occepting the U.S. Army's special order
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