Polaski Company manufactures and sells a single product called a Ret. Operating at

capacity, the company can produce and sell $32,000$ Rets per year. Costs associated

with this level of production and sales are given below:

The Rets normally sell for $$49$ each. Fixed manufacturing overhead is $$160,000$ per

year within the range of $25,000$ through $32,000$ Rets per year.

Required:

Assume that due to a recession, Polaski Company expects to sell only $25,000$ Rets

through regular channels next year. A large retail chain has offered to purchase $7,000$

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 $7,000$ units. This machine would cost $$14,000.$

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? $($Round your intermediate calculations to $2$ decimal places.$)$

Refer to the original data. Assume again that Polaski Company expects to sell only

$25,000$ Rets through regular channels next year. The U$.$S$.$ Army would like to make a

one$-$time$-$only purchase of $7,000$ 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 that the company

expects to sell $32,000$ Rets through regular channels next year. Thus, accepting the

U$.$S$.$ Army's order would require giving up regular sales of $7,000$ Rets. Given this new

information, what is the financial advantage $($disadvantage$)$ of accepting the U$.$S$.$

Army's special order?Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell $32,000$ Rets per year. Costs associated with this level of production and sales are given below:

Unit Total

Direct materials $ $20$ $ $640,000$

Direct labor $8256,000$

Variable manufacturing overhead $396,000$

Fixed manufacturing overhead $5160,000$

Variable selling expense $264,000$

Fixed selling expense $6192,000$

Total cost $ $44$ $ $1,408,000$

The Rets normally sell for $$49$ each. Fixed manufacturing overhead is $$160,000$ per year within the range of $25,000$ through $32,000$ Rets per year.

Required:

$1.$ Assume that due to a recession, Polaski Company expects to sell only $25,000$ Rets through regular channels next year. A large retail chain has offered to purchase $7,000$ 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$$s name on the $7,000$ units. This machine would cost $$14,000.$ 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? $($Round your intermediate calculations to $2$ decimal places.$)$

$2.$ Refer to the original data. Assume again that Polaski Company expects to sell only $25,000$ Rets through regular channels next year. The U$.$S$.$ Army would like to make a one$-$time$-$only purchase of $7,000$ 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?

$3.$ Assume the same situation as described in $(2)$ above, except that the company expects to sell $32,000$ Rets through regular channels next year. Thus, accepting the U$.$S$.$ Army$$s order would require giving up regular sales of $7,000$ Rets. Given this new information, what is the financial advantage $($disadvantage$)$ of accepting the U$.$S$.$ Army's special order?