50.1K

Verified Solution

Link Copied!

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 48,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $ 20 8 3 7 4 6 $48 Check my work Total $ 960,000 384,000 144,000 336,000 192,000 288,000 $ 2,304,000 The Rets normally sell for $53 each. Fixed manufacturing overhead is $336,000 per year within the range of 43,000 through 48,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 43,000 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 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 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 Idinadi alanda

Polaski Company manufactures and sells a single product called o Ret. Operating ot capacity, the company can produce and sell 48,000 Rets per year. Costs associated with this level of production and sales are given below: The Rets normally sell for $53 each. Fixed manufacturing overhead is $336,000 per year within the range of 43,000 through 48,000 Rets peryeor. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 43,000 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 off the regular price. There would be no sales commissions on this order; thus, varioble selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retall chain's name on the 5,000 units. This machine would cost $10,000 Polaski Company has no assurance thet the retail chain will purchase additional units in the future. What is the financial advantage 1. Assume that due to a recession, Polaski Company expects to sell only 43,000 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 off the regular price. There would be no sales commissions on this order; thus, varlable selling expenses would be slashed by 75%. However, Polaski Company would have 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 retall chain will purchase additional units in the future. What is the financial advantage (disadvantage) of occepting the special order? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume ogain that Polaski Company expects to sell only 43,000 Rets through regular channels next year. The US. Army would like to moke a one-time-only purchase of 5,000 Rets. The Army would reimburse Polaski for all of the variable and foxed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $180 per unit. Becouse 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

Answer & Explanation Solved by verified expert

See Answer