Problem 11-22 Special Order Decisions (L011-4) Poloski Company manufactures and sells a single product called a Ret Operating at capacity, the company can produce and sell 30,000 Rets per year Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 25 $750,000 Direct labor 240,000 Variable manufacturing overhead 3 90,000 Fixed manufacturing overhead 210.000 Variable selling expense 4 120.000 Fixed selling expense 180,000 Total cost $53 51.590.000 8 7 6 The Rets normally sell for $58 each. Fixed manufacturing overhead is $210,000 per year within the range of 24,000 through 30,000 Rets per year. Required: 1. Assume that due to a recession, Polaskl Company expects to sell only 24,000 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. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 6 Check my work 2. Refer to the originaldate Assume again that Poloski Company expects to sell only 24,000 Rets through regular channels next year The US Army would like to make a one-time only purchase of 6.000 RetsThe Army would pay a fixed fee of $180 per Ret, and it would reimburse Poloski 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. What is the financial advantage disadvantage of accepting the US Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 30,000 Rets through regular channels next year. Thus accepting the US Army order would require giving up regular sales of 6,000 Rots. Given this new information, what is the financial advantage disadvantage of accepting the US Army's special order? 162 bo 2 a