Polaski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 42,000 Rets per year. Costs associated with this level of production and sales are given below Unit $ 25 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost 3 7 4 Total $ 1,050,000 336,000 126.000 294,000 168,000 252,000 $ 2,226.000 553 The Rets normally sell for $58 each Fixed manufacturing overhead is $294.000 per year within the range of 35.000 through 42,000 Rets per year Required: 1 Assume that due to a recession Polski Company expects to sell only 35.000 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 of 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 7000 units. This machine would cost $14,000 Polaska Company has no assurance that the retail chain will purchase additional units in the future What is the financial advantage (disadvantage of nccepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Poloski Company expects to sell only 35 000 Rets through regular channels next year. The us Amy would like to make a one time only purchase of 7000 Rets The Army would pay a fixed fee of $180 per Ret and it would reimburse Polski Company for all costs of production (Variable and fored) associated with the unit Because the army would pick up the Rots with its own truck there would be no vantable selling expenses associated with this order What is the financial advantage disadvantaoel of accepting the U.S. Ammy's social order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 42.000 Rets through regular channels next year. Thus, accepting the US Army s order would require giving up regular sales of 7000 Rets Given this new Information what is the financial advantage (disadvantage) of accepting the US Army's special order? 1 2