Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell Rets per year. Costs associated with this level of production and sales are given below:

Unit Total

Direct materials                                     $ $

Direct labor                                               

Variable manufacturing overhead       

Fixed manufacturing overhead

Variable selling expense

Fixed selling expense                             

Total cost $ $

The Rets normally sell for $ each. Fixed manufacturing overhead is $ per year within the range of through Rets per year.

Required:

Assume due to a recession, Polaski Company expects to sell only Rets through regular channels next year. A large retail chain offered to purchase Rets if Polaski will accept a discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by However, Polaski Company would have to purchase a special machine for $ to engrave the retail chains name on the 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?

Note: Round your intermediate calculations to decimal places.

Refer to the original data. Assume Polaski Company expects to sell Rets through regular channels next year. The US Army would like to make a onetimeonly purchase of Rets. The Army would reimburse Polaski for all of the variable and fixed production costs assigned to the units by the companys absorption costing system, plus it would pay an additional fee of $ 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 US Army\'s special order?