Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36,000 Rets per year. Costs associated with this level of production and sales are given below:

Unit Direct materials S20 S 720,000 Direct labor 288.000 108,000 Variable manufacturing overhead Fixed manufacturing overhead 180,000 Variable selling expense 144.000 6 216,000 Fixed selling expense 1,858,000 Total cost $46 The Rets normally sell for $51 each. Fixed manufacturing overhead is constant at S180,000 per year within the range of 31,000 through Rets 36,000 per year Required: 1. Assume that due to a recession. Polaski Company expects to sell only 31.000 Rets through regular channels next year A large retail chain has offered to purchase 5.000 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 5.000 units. This machine would cost $10,000. 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. et profit