Refer to the Original Data Assume Again That Polaski Company Expects to Sell Only

Polaski Visitor manufactures and sells a single product called a Ret. Operating at capacity, the visitor can produce and sell 48,000 Rets per year. Costs associated with this level of production and sales are given beneath:

 Unit TotalDirect materials$20  $960,000 Directly labor 8   384,000 Variable manufacturing overhead 3   144,000 Fixed manufacturing overhead 7   336,000 Variable selling expense two   96,000 Fixed selling expense 6   288,000 Total cost$46  $2,208,000

The Rets commonly sell for $51 each. Fixed manufacturing overhead is $336,000 per year inside the range of 43,000 through 48,000 Rets per yr.

Required:

1. Presume that due to a recession, Polaski Company expects to sell only 43,000 Rets through regular channels adjacent yr. A large retail chain has offered to purchase five,000 Rets if Polaski is willing to accept a 16% discount off the regular price. In that location would be no sales commissions on this guild; thus, variable selling expenses would be slashed by 75%. However, Polaski Visitor would have to buy a special auto to engrave the retail chain's proper noun on the five,000 units. This machine would toll $ten,000. Polaski Company has no assurance that the retail chain will purchase boosted units in the future. What is the fiscal advantage (disadvantage) of accepting the special order?(Round your intermediate calculations to 2 decimal places.)

2. Refer to the original data. Presume again that Polaski Visitor expects to sell only 43,000 Rets through regular channels next year. The U.South. Army would similar to make a one-time-only buy of 5,000 Rets. The Ground forces would reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company'due south absorption costing organisation, plus it would pay an additional fee of $1.40 per unit. Because the army would pick up the Rets with its own trucks, at that place would be no variable selling expenses associated with this order. What is the financial reward (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation equally described in (ii) above, except that the company expects to sell 48,000 Rets through regular channels next twelvemonth. Thus, accepting the U.South. Regular 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 U.S. Army'southward special order?

Paradigm transcription text

Financial advantage ii. Fiscal reward iii Financial (disadvantage)

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