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Polaski Company manufactures and selis a single product called a Ret. Operating at capacity, the company can produce and sell 42,000 Rets per year. Costs associated with this level of production and sales are glven below: The Rets normally sell for $46 each. Fixed manufacturing overhead is $294,000 per year within the range of 37,000 through 42,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 37,000 Rets through regular channels next yeac, A large retal 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 selling expenses would be slashed by 75%. However. Polaskic Company would hove to purchase a special machine to engrave the retail chain's name on the 5,000 units. This machine would cost $10,000. 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 Polask Company expects to sell only 37,000 Rets through regular channels next year. The US Army would like to make a one-time-only purchase of 5,000 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 $160 per unit. Because the army would \$ick 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? 3. Assume the same situation as described in (2) above, except that the company expects to sell 42,000 Rets through regular channels next yeat. Thus, occepting the U.S. Army's order would require giving up regular sales of 5,000 Rets, Given this new information, what is the financial advantage (disadvantage) of accepting the US. Army's special order? SIven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven's president has decided to introduce only one of the new products for this coming winter. If the product is a success, further expansion in future years will be initiated. The product selected (called Chap-Off) is a lip balm that will be sold in a lipstick-type tube. The product will be sold to wholesalers in boxes of 24 tubes for $10 per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce the product. However, a $115,500 charge for fixed manufacturing overhead will be absorbed by the product under the company's absorption costing system. Using the estimated sales and production of 165,000 boxes of Chap-Off, the Accounting Department has developed the following manufacturing cost.per box The costs above relate to making both the lip baim and the tube that contains it. As an alternative to making the tubes for Chap-Orf, Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $2.00 per box of 24 tubes. If Silven Industries stops making the tubes and buys them from the outside supplier, its direct labor and variable manufacturing overhead costs per box of Chap-Oif would be reduced by 10 s and its direct materials costs would be reduced by 30% Required: 1. If Silven buys its tubes from the outside supplier, how much of its own Chap-Off manufacturing costs per box wilt it be able to avoid? (Hint You need to separate the manufacturing overhead of $210 per box that is shown above into its variable and tixed components to derive the correct answer) 2. What is the financial advantage (disadvantage) per box of Chap-Orf if Silven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) if Silven buys 165,000 boxes of tubes from the outside suppler? 4. Should Silven industries make or buy the tubes? 5. What is the maximum price that Silven should be wiling to pay the outside supplier for a box of 24 tubes? 6 Instead of sales of 165,000 boxes of tubes, revised estimates show a sales volume of 203,000 boxes of tubes. At this higher saies volume. Silven would need to rent exva equipment at a cost of $70.000 per year to make the additional 38,000 boves of tubes Assuming that the outside supplier wil not accept an order for less than 203,000 boxes of tubes, what is the financial advantage (disadvantege) in total (not per box) if Silven buys 203,000 boxes of tubes from the outside supplien? Given this new information, Required: 1. If Silven buys its tubes from the outside supplier, how much of its own Chap-Off manufacturing costs per box will it be able to avoid? (Hint: You need to separate the manufacturing overhead of $210 per box that is shown above into its variable and fixed components to derive the correct answer) 2. What is the financial advantage (disadvantage) per box of Chap-Off if Silven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) if Silven buys 165.000 boxes of tubes from the outside supplier? 4 Should Silven Industries make or buy the tubes? 5. What is the maximum price that Silven should be willing to pay the outside supplier for a box of 24 tubes? 6. Instead of sales of 165,000 bokes of tubes, revised estimates show a sales volume of 203,000 boxes of tubes. At this higher sales volume, Silven woud need to rent extra equipment at a cost of $70,000 per year to make the additional 38,000 boxes of tubes. Assuming that the outside supplier will not accept an order for less than 203.000 boves of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 203,000 boxes of tubes from the outside supplier? Given this new information. should Silven Industries make or buy the tubes? 7. Refer to the data in Required 6 . Assume that the outside supplier will accept an order of any size for the tubes at a price of $2.00 per box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier