Problem $13-24($Algo$)$ Speclal Order Declslons $[$L$013-4]$

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell

$48,000$ Rets per year. Costs assoclated with this level of production and sales are glven below.

The Rets normally sell for $$55$ each. Fixed manufacturing overhead is $$336,000$ per year within the range of $38,000$ through $48,000$

Rets per year.

Required:

Assume due to a recession, PolaskI Company expects to sell only $38,000$ Rets through regular channels next year. A large retall

chain offered to purchase $10,000$ Rets if Polaskl will accept a $16\%$ discount off the regular price. There would be no sales

commissions on this order; thus, varlable selling expenses would be slashed by $75\%$ However, Polaskl Company would have to

purchase a speclal machine for $$20,000$ to engrave the retall chaln's name on the $10,000$ 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 Intermedlate calculations to $2$ decimal places.

Refer to the original data. Assume Polaskl Company expects to sell $38,000$ Rets through regular channels next year. The U$.$S$.$ Army

would like to make a one$-$time$-$only purchase of $10,000$ Rets. The Army would relmburse Polaskl for all of the varlable and fixed

production costs assigned to the units by the company's absorption costing system, plus It would pay an additional fee of $$1\mathrm{.}60$ per

unlt. Because the army would plck up the Rets with its own trucks, there would be no varlable selling expenses assoclated with this

order. What is the financlal advantage $($disadvantage$)$ of accepting the U$.$S$.$ Army's speclal order?

Assume the same situation as described in $(2)$ above, except the company expects to sell $48,000$ Rets through regular channels

next year. Thus, acceptIng the U$.$S$.$ Army's order would require glving up regular sales of $10,000$ Rets. Glven this new information,

what is the financial advantage $($disadvantage$)$ of accepting the U$.$S$.$ Army's special order?