Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Polaski Company manufactures and sells a single product called a Ret. Operating at capacily, the company can produce and sell 30,000 Rets per year. Costs

image text in transcribed
Polaski Company manufactures and sells a single product called a Ret. Operating at capacily, 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. Foxed manufacturing overhead is $270,000 per year within the range of 21,000 through 30,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 21,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is wiling to accept a 16% discount ofr the regular price. There. would be no sales commissions on this order; thus, variable seling expenses would be slashed by 75%. However, Polasia Company would have to purchase a special machine to engrave the retail chain's name on the 9.000 units. This machine would cost $18.000. Polaski Company has no assurance that the retail chain wil purchase additional units in the future What. is the financlal advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Reter to the original data. Astume again that Polaski Company expects to 1e ilt only 21,000 Rets through regutar channets next year. The US. Army would like to make a one-time-only purchase or 9000 Rets. The Army woula reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus if would pay an addinonat tee of $1 80 per unit. Because the amy 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 US. Armys spectal order? 3. Assurne the same situation as descrbed in (2) above. except that the company expects to sell 30000 Rets through regular channels next year. Thus, accepting the US Ammye order would requie giving up regulor sales or 9000 Rets. Given this new information, what is the financial odvantage (disadvantage) of accepting the U.S. Aumy's speciat order

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_step_2

Step: 3

blur-text-image_step3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

Compare the different types of employee separation actions.

Answered: 1 week ago

Question

Assess alternative dispute resolution methods.

Answered: 1 week ago

Question

Distinguish between intrinsic and extrinsic rewards.

Answered: 1 week ago