Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 42,000 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 Total $840,000 6 252,000 3 126,000 7 294,000 2 84,000 6 252,000 $ 44 $ 1,848,000 The Rets normally sell for $49 each. Fixed manufacturing overhead is $294,000 per year within the range of 35,000 through 42,000 Rets per year. Required: 1. Assume due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain offered to purchase 7,000 Rets if Polaski will 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 for $14,000 to engrave the retail chain's name on the 7,000 units. 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? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume Polaski Company,expects to sell 35,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 7,0do Rets. The Army would reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1.60 per 1. Assume due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain offered to purchase 7,000 Rets if Polaski will 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 for $14,000 to engrave the retail chain's name on the 7,000 units. 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? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume Polaski Company expects to sell 35,000 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 reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus it 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 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 the company expects to sell 42,000 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? Answer is complete but not entirely correct. 1 Financial advantage $ 75,880 2. Financial advantage $57,400 3. Financial (disadvantage) (68,600) Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 42,000 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 Total $840,000 6 252,000 3 126,000 7 294,000 2 84,000 6 252,000 $ 44 $ 1,848,000 The Rets normally sell for $49 each. Fixed manufacturing overhead is $294,000 per year within the range of 35,000 through 42,000 Rets per year. Required: 1. Assume due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain offered to purchase 7,000 Rets if Polaski will 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 for $14,000 to engrave the retail chain's name on the 7,000 units. 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? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume Polaski Company,expects to sell 35,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 7,0do Rets. The Army would reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1.60 per 1. Assume due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain offered to purchase 7,000 Rets if Polaski will 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 for $14,000 to engrave the retail chain's name on the 7,000 units. 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? Note: Round your intermediate calculations to 2 decimal places. 2. Refer to the original data. Assume Polaski Company expects to sell 35,000 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 reimburse Polaski for all of the variable and fixed production costs assigned to the units by the company's absorption costing system, plus it 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 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 the company expects to sell 42,000 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? Answer is complete but not entirely correct. 1 Financial advantage $ 75,880 2. Financial advantage $57,400 3. Financial (disadvantage) (68,600)
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
How can adults continue to function relatively normally after surgery to remove the thymus, tonsils, spleen, or lymph nodes?
-
A sports apparel company has received an order for a college basketball teams national championship T-shirt. The company can purchase the T-shirts from textile factories in Mexico, Puerto Rico, and...
-
Beeman Company exchanged machinery with an appraised value of $1,755,000, a recorded cost of $2,700,000 and Accumulated Depreciation of $1,350,000 with Lacey Corporation for machinery Lacey owns. The...
-
MonsterMed Inc. (MMI) is an online pharmaceutical firm. MMI has a small systems staff that designs and writes MMFs customized software. Until recently, MMIs transaction data were transmitted to a...
-
Keisha Tombert, the bookkeeper for Washington Consulting, a political consulting firm, has recently completed a managerial accounting course at her local college. One of the topics covered in the...
-
What about Kraft Heinz. They currently pay an annual dividend of $ 2 . 4 3 and we expect that to grow at a constant rate of 1 . 7 % . Assuming the market requires a ( n ) 7 . 3 % return from Kraft...
-
1. Identify all the candidate keys of the relation. 2. Identify all the functional dependencies in the relation. 3. Examine the determinants of the functional dependencies. If any determinant is not...
-
The following cost data pertain to the operations of Montgomery Department Stores, Incorporated, for the month of July. Corporate legal office salaries $ 6 2 , 2 0 0 Apparel Department cost of sales...
-
Which of the following statements are true about supervised learning? Supervised learning is called 'supervised', because it works by leveraging certain domain-based rules provided by the experts...
-
Pina Colada Corp. has the following transactions during August of the current year. Aug. 1 Opens an office as a financial advisor, investing $4,000 in cash in exchange for common stock. 4 Pays...
-
A 10kg Ice Skater is moving at 6 m/s and is headed towards a stationery 4kg snowman. After the two collide, the ice skater has 0 m/s of velocity and the snowman moves forward. What is the velocity of...
-
A certain department produced 16,000 units of a product that had a standard materials cost of two pounds at $1.70 per pound and a standard labor cost of two hours per unit at $9.40 per hour. Actual...
-
3 If cot 0 and 0 is in QIV, find the other 5 trigonometric functions. 4 = --
-
During the month, services performed for customers on account amounted to $7,500 and collections from customers in payment of their accounts totaled $6,000. At the end of the month, the Accounts...
-
Write a computing procedure to make draws from a univariate truncated normal density T N [ a , b ] [ , 2 ] using the inverse transform method given in Section 12.8.2. Here [ a , b ] are lower and...
-
Consider the standard binary logit regression model (see Section 14.3). (a) Write down the log-likelihood function. (b) Introduce a random intercept assumption in which the intercept is drawn from a...
-
Show that if N [ , 1 ] , and Gamma [ / 2 , / 2 ] , then the unconditional distribution of is a multivariate t -distribution with parameters ( , , ) .
Study smarter with the SolutionInn App