# Polaski Company manufactures and sells a single product called a Ret..docx

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Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36,000 Rets per year. Costs associated with this levelof production and sales are given below: Total 540,000 288,000 108,000 180,000 72,000 216,000 Unit \$ 15 8 3 5 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense 6 \$ 39 1,404,000 Total cost The Rets normally sell for \$44 each. Fixed manufacturing overhead is constant at \$180,000 per year within the range of 29,000 through 36,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 29,000 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