Problem 10-22A Accept or Reject a Special Order LLO10-4 Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 46,000 Rets per year. Costs associated with this level of production and sales are given below: Total ni $15 6 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense 690,000 276,000 138,000 414,000 184,000 276,000 4 6 Total cost $43 $ 1,978,000 The Rets normally sell for $48 each. Fixed manufacturing overhead is constant at $414,000 per year within the range of 40,000 through 46,000 Rets per year Required 1. Assume that due to a recession, Polaski Company expects to sell only 40,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 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 6,000 units. This machine would cost $12,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. Determine the impact on profits next year if this special order is accepted Answer is complete and correct Net profitncreasesby 79,920