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Problem 12-22 Special Order Decisions [LO12-4) Polaski 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 $ 25 Direct materials Direct Labor Variable manufacturing overhead Fixed manufacturing overhead Variable sellist expense Fixed selling expense Total cost Total 750, 240.000 90.000 270.000 180,00 $ 1,500,000 The Rets normally sell for $58 each. Fored manufacturing overhead is $270,000 per year within the range of 24.000 through 20,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 24,000 Rets through regular channels next year A large retail chain has offered to purchase 5 000 Rets if Polaski is willing to accept a 16 discount of the regular price There would be no Sales commissions on this order thus variable selling expenses would be slashed by 75%. However, Polaska Company would have to purchase a special machine to engrave the retas chain's name on the 6.000 units. This machine would cost $12000 Poloski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial acvantage disadvantage of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data Assume again that polas company expects to sel only 24 000 Rets through regular channels next year The US Army would like to make a one time only purchase of 6000 Rets. The Army would pay a fixed fee of $1 40 per Ret and it would reimburse Polaski Company for all costs of production anable and fixed associated with the units Because the amy 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) bove, except that the company expects to set 30.000 Rets through regular channels next year. Thus accepting the US Army's order would regude g up regular sales of 6.000 Rets. Given this new information what is the ancial advantage disadvantage of accepting the US Armys special order Financial advantage Financial (disadvantage)