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Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs

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Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with this level of production and sales are given below Unit Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense $15 S 450,000 240,000 90,000 270,000 120,000 180,000 Total cost $ 45 $ 1,350.000 The Rts nomaly utorsso ench Fiued manutacturng overnead is constant at $270.00 per year , within the range of 25,000 through 30,000 Rets per year Required: 1. Assume that due to a recession. Polaski Company expects to sell only 25,000 Rets through regular cept o sales commissions on this order, thus, variable would be lashed by 75% However Polaski Company would have to purchase a special machine to engrave the retal chain's name on the 5.000 units This machine would cost $10,000 Polaski Company has no assurance that the retal chain WiN purchase additional units in the channels next year A large retail chain has offered to purchase 5,000 Rets if Polaski is witing to ac selling expenses future Determine the impact on profits next year if this special order is accepted et profit 2 Refer to the onginal data Assume agan that Polask Company expects to sell only 25.000 Rets through egular channels next year The U.S Amy wourd ie to make a one-time only purchase of 5.000 Ra

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