Problem 10-22A Accept or Reject a Special Order [LO10-4] Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs associated with this level of production and sales are given below Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing Variable selling expense Fixed selling expense $20 $680,000 340,000 102,000 238,000 136,000 204,000 Total cost $50 1,700,000 The Rets normally sell for $55 each. Fixed manufacturing overhead is constant at $238,000 per year within the range of 29,000 through 34,000 Rets per year Required: 1. Assume that due to a recession, Polaski Company expects to sell only 29,000 Rets through regular channels next year. A large retail chain has offered to purchase 5,000 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 , Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 5,000 units. This machine would cost selling expenses would be slashed by 75%, However $10,000. Polaski Company has no assurance that the retail chain will pu future. Determine the impact on profits next year if this special order is accepted additional units in the 0 Net profit increases 2. Refer to the original data. Assume again that Polaski Company expects to sell only 29,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 5,000 Rets The Army would pay a fixed fee of $1.80 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. If Polask Company accepts the order, by how much will profits increase or decrease for the year? et profit increases by 3. Assume the same situation as that described in (2) above, except that the company expects to sell 34,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 5,000 Rets. If the Army's order is accepted, by how much will profits increase or decrease from what they would be if the 5,000 Rets were sold through regular channels? Net pro