Problem $13-24($Algo$)$ Special Order Decisions $[$LO$13-4]$

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell $38,000$ Rets per year. Costs associated with this level of production and sales are given below:

$$UnitTotalDirect materials$ $20$$ $760,000$Direct labor$8304,000$Variable manufacturing overhead$3114,000$Fixed manufacturing overhead$5190,000$Variable selling expense$276,000$Fixed selling expense$6228,000$Total cost$ $44$$ $1,672,000$

The Rets normally sell for $$49$ each. Fixed manufacturing overhead is $$190,000$ per year within the range of $31,000$ through $38,000$ Rets per year.

Required:

Assume due to a recession, Polaski Company expects to sell only $31,000$ 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.

Refer to the original data. Assume Polaski Company expects to sell $31,000$ 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\mathrm{.}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?

Assume the same situation as described in $(2)$ above, except the company expects to sell $38,000$ 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?