Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company...

Total Capacity Current Operating Level Special Order Selling Price Direct Material Direct labor Variable Manufacturing overheads Fixed Manufacturing Overheads Variable Selling Expenses Fixed Selling Expenses Total Cost 36000 27000 9000 55 20.00 8.00 3.00 9.00 4.00 6.00 50 Answers 1) Financila Advantage 2) Financial Advantage 3) Financial Disadvantage 109800 97200 82800

1) if Accept the retail Chain Offer at 16% Discount Price. For 9,000 rets Per unit 9000 Units Sales Revenue 46.20 415800 Direct Material 20.00 180000 Direct labor 8.00 72000 Variable Manufacturing overheads 3.00 27000 Variable Selling Expenses 1.00 9000 Special Machine 18000 Net Operating income From Order 109800 Net profit Increase By 109800 2)IF Accept the US Army Order for Fixed fee of $1.80, and all Manufactruing Cost will Reimburse Per unit 9000 Units Fixed Fee Received 1.8 16200 Reimberse the Fixed MOH 81000 Incremental Net profit 97200 Net profit Increase By 97200

3) IF US Army order Accepted but Operating at full capacity. At Current operating Full Capacity Levele 36000 27000 Units Sales Revnue 1980000 1485000 Direct Material 720000 540000 Direct labor 288000 216000 Variable Manufacturing overheads 108000 81000 Fixed Manufacturing Overheads 324000 324000 Variable Selling Expenses 144000 108000 Fixed Selling Expenses 216000 216000 Total Cost 18000001485000 Net Profit 180000 97200 Increemtnal Analysis Increse in Net profit by Order Lose in profit for the Special Oder = (0-180000) Decrease in net Profit -180000 -82800 Net Profit Will Decrase by 82800