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Polaski Company manufactures and sells a single prod uct called a Ret. Operating at capadity, the company can produce and sell 40,000 Rets per year. Costs as sociated with this level of production and sales are given below: The Rets normally sell for $53 each. Fixed manufacturing ove thead is $280,000 per year within the range of 33,000 through 40,000 Rets per year. Required: 1. Assume that due to a re cession, Polaski Company expects to sell only 33,000 Rets through regular channels next year. A large re tail chain has offered to purchase 7,000 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. Polaski Company would have to purchase a special machine to engrave the retail chan's name on the 7,000 units. This mach ine would cost $14,000. Polaski Company has no assuran c that the retail chain will purchase additional units h the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermedlate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Polaski Company expects to sell only 33,000 Rets throug h regular channels nextyear. The U.S. Army would Ike to make a one-time-only purchase of 7,000 Rets. The Army would reimburse Polaski for all of the variable and fbed production costs assigned to the units by the company's absorption costing system, plus t would pay an additional fee of $1.60 per unit. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses as so dated with this order. What is the financial advantage (d isad vantage) of accepting the U.S. Amys special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 40,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 7,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order

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