Problem 13-22 (Algo) Special Order Decisions (L013-4) Polaskt 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 associated with this level of production and sales are given below mit $15 10 3 Direct materials Direct Labor Variable wanufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cos Total 720,000 180,000 144,000 432.000 192,000 285,000 5 2.256,000 547 The Rets normally sell for $52 each Fixed manufacturing overhead is $432,000 per year within the range of 39.000 through 48,000 Rets per year. Required: 1. Assume that due to a recession, Polski Company expects to sell only 39,000 Rets through regular channels next year A large retail chain has offered to purchase 9,000 Rets 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 engrove the retail chain's name on the 9,000 units. This machine would cost $18,000. 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.) 2. Refer to the original data. Assume again that Poloski Company expects to sell only 39.000 Rets through regular channels next year, The US Army would like to make a one time-only purchase of 9.000 Rets, The Army would reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1,80 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 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 48,000 Rets through regular channels next year. Thus, accepting the US Army's order would require giving up regular sales of 9.000 Rets. Given this new information, what is the financial advantage (disadvantage of accepting the U.S. Army's special order? handal advantage 2. Financial advantage 3 nancial (disadvantage) Prov 3 of 4 !!! Next > to search O