Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 25 $ 1,100,000 Direct labor 6 264,000 Variable manufacturing overhead 3 132,000 Fixed manufacturing overhead 7 308,000 Variable selling expense 4 176,000 Fixed selling expense 6 264,000 Total cost $ 51 $ 2,244,000 The Rets normally sell for $56 each. Fixed manufacturing overhead is constant at $308,000 per year within the range of 35,000 through 44,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 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 chains name on the 9,000 units. This machine would cost $18,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. Determine the impact on profits next year if this special order is accepted.