Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Unit $ 20 Total $640,000 10 320,000 3 96,000 9 288,000 4 128,000 6 192,000 $ 52 $ 1,664,000 Total cost The Rets normally sell for $57 each. Fixed manufacturing overhead is $288,000 per year within the range of 23,000 through 32,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 23,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 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 9,000 units. This machine would cost $18,000. 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 23,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 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 $1.60 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 9,000 Rets. Given this new Information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order? 1. Financial advantage 2. Financial advantage 3. Financial (disadvantage) 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: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Unit $ 20 Total $640,000 10 320,000 3 96,000 9 288,000 4 128,000 6 192,000 $ 52 $ 1,664,000 Total cost The Rets normally sell for $57 each. Fixed manufacturing overhead is $288,000 per year within the range of 23,000 through 32,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 23,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 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 9,000 units. This machine would cost $18,000. 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 23,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 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 $1.60 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 9,000 Rets. Given this new Information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order? 1. Financial advantage 2. Financial advantage 3. Financial (disadvantage)
Expert Answer:
Answer rating: 100% (QA)
1 Financial Advantage or Disadvantage of Accepting the Special Order from the Retail Chain Given Reg... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
Question content area top Part 1 You are choosing between two projects. The cash flows for the projects are given in the following table ( $ million ) : Project Year 0 Year 1 Year 2 Year 3 Year 4 A...
-
This organization encourages companies like Apple and Gap to sell products where a portion of the proceeds from the sale of each product goes toward supporting efforts to reduce HIV / AIDS , which...
-
Exercise 16-8 (Algo) Selected Financial Ratios [LO16-2, LO16-3, LO16-4] The financial statements for Castile Products, Incorporated, are given below: Castile Products, Incorporated Balance Sheet...
-
We plan to remove about 90% of the A present in a gas stream by absorption in water which contains reactant B. Chemicals A and B react in the liquid as follows: B has a negligible vapor pressure,...
-
The Maxwell-Boltzmann probability density function f(v) is given by where m (kg) is the mass of each molecule, v (m/s) is the speed, T(K) is the temperature, and k = 1.38 10-23 J/K is Boltzmann's...
-
Rewrite each expression with a single sine or cosine. a. cos 1.5 cos 0.4 + sin 1.5 sin 0.4 b. cos 2.6 cos 0.2 - sin 2.6 sin 0.2 c. sin 3.1 cos 1.4 - cos 3.1 sin 1.4 d. sin 0.2 cos 0.5 + cos 0.2 sin...
-
Acceleration Oil Company purchased new tubing and casing to replace damaged tubular goods in a well. The new tubular goods were installed in a producing well. The cost of the items were as follows:...
-
Contrast the arguments concerning union membership that are likely to be presented by a union with those likely to be presented by an employer.
-
Question 4 Points 2 Find the vertices of the triangle ABC after dilation with a scale factor of 1/2 and whose center of dilation is at the origin. 0 Y 2 4 6 B -6- A B C -8- QA' (3,-3), B' (7,-3), C'...
-
Claymont Company instituted a vacation and sick pay policy on January 1, 2018. Thirty employees, whose salaries averaged $100 per day, were covered under the plan. The policy allows each employee...
-
Tamarisk, Inc. reported the following in its 2025 and 2024 income statements. 2025 2024 Net sales $158,000 $128,000 Cost of goods sold 82,160 66,560 Operating expenses 31,600 19,200 Income tax...
-
How has the firm Goodyear's corporate-level strategy evolved over time? Explain
-
MUNOZ COMPANY Balance sheet Assets Cash $ 14,800 Marketable securities 7,860 Accounts receivable Inventory Property and equipment Accumulated depreciation Total assets Liabilities and Stockholders'...
-
How can organizations proactively address the ethical and moral dilemmas inherent in the pursuit of organizational development initiatives, balancing the imperative for growth and profitability with...
-
Marigold Corporation had 8 6 0 0 0 0 shares of common stock outstanding during the year. Marigold declared and paid cash dividends of $ 4 7 3 0 0 0 on the common stock and $ 3 3 0 0 0 0 on the...
-
You (Can) Complete Me People differ greatly in their individual needs, preferences, and values, but one thing we have in common is that we all need social interaction. In fact, some researchers view...
-
The Home Depot is the leading retailer in the home improvement industry and one of the 10largest retailers in the United States. The company included the following on its January 29, 2012, balance...
-
Define: convertible bond, bond with equity warrants, preference share, investment certificate and bond redeemable in shares.
-
The bond market yield is 7%. A company issues a bond with equity warrants at a gross yield to maturity of 3% assuming the warrants are not exercised. What is the cost of this product? What is the...
-
Is a convertible bond more costly to the issuing company than a bond with equity warrants?
Study smarter with the SolutionInn App