I need help with questions 1 & 2.

Problem 11-22 Special Order Decisions [LO11-4] Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs associated with this level of production and sales are given below: shift $ Unit $ 20 8 3 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Total 680,000 272,000 102,000 238,000 68,000 204,000 1,564,000 6 $ 46 $ The Rets normally sell for $51 each. Fixed manufacturing overhead is $238,000 per year within the range of 27,000 through 34.000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 27,000 Rets through regular channels next year. A large retail 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 chain's name on the 7,000 units. This machine would cost $14,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Polaski Company expects to sell only 27,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 7,000 Rets. The Army would pay a fixed fee of $1.80 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. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 34.000 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? B D E H $ per unit 322,000 $ 46.00 $ SPECIAL ORDERS 7000 tunits Incremental Revenue (units x increm cost) Less: Incremental Cost (units x Variable cost) Financial Advantage of accepting Order 37 38 39 INCREMENTAL ANALYSIS 40 Incremental revenue 41 Less Variable Costs: 42 DM $ 43 DL $ 44 VMOH $ 45 FMOH $ 46 Variable selling exp $ 47 Fixed selling exp $ 48 Total variable costs $ 49 Addi costs for special order 50 Total incremental costs 20.00 $ 140,000.00 8.00 $ 56,000.00 8.00 $ 56,000.00 7.00 $ 49,000.00 2.00 $ 14,000.00 6.00 $ 42,000.00 51.00 $ 357,000.00 $ 357,000.00 Financial adv (disadv) of accepting special order ($35,000.00) {$5.00) Total 51 52 89 90 11- Special order 1.3 11. Special order 1.3 (2) 11 - Eliminate Co 11. Make or Buy 51 Counto Sumo Type here to search o a A2 X fox B D E F G H 2 3 DM 4 DL 5 VMOH 6 FMOH 7 Var Selling Expenses S 8 Fixed Selling Expenses 5 9 Total Cost s 10 uuuuuu Unit Total 20.00 $ 680,000.00 8.00 S 272,000.00 3.00 $ 102,000.00 7.00 $ 238,000.00 2.00 $ 68,000.00 6.00 $ 204,000.00 46.00 $1,564,000.00 SPECIAL ORDERS 340001 #units ncremental Revenue (units x increm cost) Less: Incremental Cost (units x Variablec Financial Advantage of accepting Order $ 43 37 38 39 INCREMENTAL ANALYSIS Sper unit 40 Incremental revenue 5 39.805 1,353,200 41 Less Variable Costs: 42 DM 5 20.00 $ 680,000.00 DL S 8.00 $ 272,000.00 44 VMOH $ 3.00 $ 102,000.00 45 FMOH $ 46 Variable selling exes Fixed selling exp S 48 Total variable costs $ 31.00 $1,054,000.00 49 Add costs for special order 50 Total incremental costs $ 1,054,000.00 11- Special order 1.3 11- Special order 1.3 (2) 11- Eliminate Co. 11- Make or Buy Type here to search a