Question
Refer to the original data. Assume again that Polaski Company expects to sell only 39,000 Rets through regular channels next year. The U.S. Army would
Refer to the original data. Assume again that Polaski Company expects to sell only 39,000 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 $1.60 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. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?
^Assume the same situation as described from above^, except that the company expects to sell 44,000 Rets through regular channels next year. Thus, accepting the U.S. Armys order would require giving up regular sales of 5,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?
Step by step, please and thanks.
Polaski Company manufactures and sells a single product called a Ret. Opera capacity, the company can produce and sell 44,000 Rets per year this level of production and sales are given below The Rets normally sell for $51 each Fixed manufacturing Variable manufacturing overhead is $308,000 per Fixed manufacturing year within the range of 39,000 through 44,000 Rets per year ting at associated with . Costs Unit Total Direct materials Direct labor $20 $ 880,0ee 264,00e 132,eee 388, 176,e0e 6 3 overhead 7 overhead Variable selling expense Fixed selling expense Total cost 4 6 264 , $46 $2,024,eeeStep by Step Solution
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