Please show me the work so I can understand how to answer the question

Please show me the work so I can understand how to answer the question

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[The following information applies to the questions displayed below.]
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the
company can produce and sell 19,100 Rets per year. Costs associated with this level of production and
sales are given below:
Unit
Total
Direct materials
$15
$243,100
Direct labor
6
99,100
Variable
manufacturing
overhead
2
35,100
Fixed manufacturing
overhead
9
147,100
Variable selling
expense
2
35,100
Fixed selling expense
4
67,100
Total cost
$38
$719,600
The Rets normally sell for $70 each. Fixed manufacturing overhead is constant at $147,100 per year
within the range of 16,000 through 19,100 Rets per year.
rev: 02-12-2011, 01_0
Requirement 1:
Assume that due to a recession, Polaski Company expects to sell only 16,000 Rets through regular
channels next year. A large retail chain has offered to purchase 3,100 Rets if Polaski is willing to accept a
11% discount off the regular price. There would be no sales commissions on this order; thus, variable
selling expenses would be slashed by 57%. However, Polaski Company would have to purchase a
special machine to engrave the retail chain’s name on the 3,100 units. This machine would cost $6,200.
Polaski Company has no assurance that the retail chain will purchase additional units in the future.
Calculate the net increase/decrease in profits next year if this special order is accepted.
(Omit the “$”
sign in your response.)
Net in profits
$
rev: 02-12-2011
ask your instructor a question
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Requirement 2:
Assume again that Polaski Company expects to sell only 16,000 Rets through regular channels next
year. The U.S. Army would like to make a one-time-only purchase of 3,100 Rets. The Army would pay a
fixed fee of $1.78 per Ret, and it would reimburse Polaski Company for all costs of production (variable
and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there
would be no variable selling expenses associated with this order. If Polaski Company accepts the order,
by how much will profits increase or decrease for the year?
(Omit the “$” sign in your response.)
Net in profits
$
rev: 02-12-2011, 01_04_2013
ask your instructor a question
check my work
eBook Link
references

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