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Problem 13-24 (Algo) Special Order Decisions [LO13-4] Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce

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Problem 13-24 (Algo) Special Order Decisions [LO13-4] Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 40,000 Rets per year. Costs associated with this level of production and sales are given below: The Rets normally sell for $56 each. Fixed manufacturing overhead is $280,000 per year within the range of 34,000 through 40,000 Rets per year. Assume due to a recession, Polaski Company expects to sell only 34,000 Rets through regular channels next year. A large retall chain offered to purchase 6,000 Rets if Polaskl will 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 wouid have to purchase a speclal machine for $12,000 to engrave the retail chain's name on the 6,000 units. Polaski Company has no assurance that the retall chain will purchase additional units in the future. What is the financlal advantage (disadvantage) of accepting the special order? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume Polaski Company expects to sell 34,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 6,000 Rets. The Army would reimburse Polaski 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 $i so per unit. Because the army would plick 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 special order? 3. Assume the same sltuation as described in (2) above, except the company expects to sell 40,000 Rets through reguiar charnels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 6,000 Rets, Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order? unit. Because the army would pick up the Rets with its own trucks, there would be no varlable selling expenses associat order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order? 3. Assume the same situation as described in (2) above, except the company expects to sell 40,000 Rets through regular ch next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 6,000 Rets, Given this new inforn what is the financial advantage (disadvantage) of accepting the U.S. Army's special order

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