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:

The Rets normally sell for $$50$ each. Fixed manufacturing overhead is $$270,000$ per year within the range of $25,000$

through $30,000$ Rets per year.

Required:

Assume due to a recession, Polaski Company expects to sell only $25,000$ Rets through regular channels next

year. A large retail chain offered to purchase $5,000$ Rets if Polaski will 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 for $$10,000$ to engrave the retail chain's

name on the $5,000$ units. Polaski Company 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?

Refer to the original data. Assume Polaski Company expects to sell $25,000$ Rets through regular channels next

year. The U$.$S$.$ Army would like to make a one$-$time$-$only purchase of $5,000$ Rets. The Army would reimburse

Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption

costing system, plus it would pay an additional fee of $$1\mathrm{.}80$ per unit. Because the army would pick up the Rets

with its own trucks, there would be no variable selling expenses associated with this order. What is the financial

advantage $($disadvantage$)$ of accepting the U$.$S$.$ Army's special order?

Assume the same situation as described in $(2)$ above, except the company expects to sell $30,000$ Rets through

regular channels next year. Thus, accepting the U$.$S$.$ Army's order would require giving up regular sales of $5,000$

Rets. Given this new information, what is the financial advantage $($disadvantage$)$ of accepting the U$.$S$.$ Army's

special order?