Polaski Company manulactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36.000 Rets per year. Costs associated with this level of production and saies are given below The Rets normally sell for $53 each. Fixed manufacturing overhead is $324,000 per year within the tange of 27,000 through 36.000 Rets per year Required: 1. Assurne that due to a recession. PoLiski Company expects to sell only 27,000 Rets through regular channeis next year. A large retall chain has offered to purchase 9,000 Rets if Polaski is wiling 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 retal chain's name on the 9,000 units. This machine would cost $18,000. Polaski Compary 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 intermediote colculotions to 2 decimal places.) 2 Refer to the original data. Assume again that Polaski Company expects to sell only 27,000 Rets throughregular channels next yeat The US. Army would lake to make a one-time-only purchase of 9,000 Rets. The Army would reimburse Polaskifor all of the variable and foed production costs assigned to the units by the compary's absorption costing system, plus it would pay an additional fee of St 20 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 financiol advantage (disadvantage) of accepung the US. Army's special order? 3. Assume the same satuation as described in (2) above, except that the compary expects to sell 36,000 Rets through regular channels next year Thus, accepting the US. Army's order would require glving up regular sales of 9,000 Rets. Given this new information. what is the financial advantage (disadvantage) of accepting the U.S. Amys npeciat order
