Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell40,000 Rets per year. Costs associated with this level of production and sales are as follows:UnitTotalDirect materials$20.502$820,000540,000340,000580,000160,000240,000Direct labour13.50Variable manufacturing overheadFixed manufacturing overheadVariable selling expenseFixed selling expense8.5014.504. ০06.00Total cost$67.00$2,680,000The Rets normally sell for $72 each. Fixed manufacturing overhead is constant at $580,000 per year within the range of 24,000through 40,000 Rets per year.Required:1. Assume that, due to a recession, Polaski Company expects to sell only 24,000 Rets through regular channels next year. A large retailchain has offered to purchase 16,000 Rets if Polaski is willing to accept a price lower than the regular $72. There would be no salescommissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have topurchase a special machine to engrave the retail chain's name on the 16,000 units. This machine would cost $32,000. PolaskiCompany has no assurance that the retail chain will purchase additional units any time in the future. Determine the maximum discountthat Polaski can offer to this large retail chain in order for it to be no worse off compared to its current profit. (Do not roundintermediate calculations. Round your percentage answer to nearest whole number.)Maximum discount

Total cost of 40000 units =2680000 For 16000 units additional cost required are $32000 Now Fixed…

ally sell for $72 each. Fixed manufacturing overhead is constant at $580,000 per year within the Rets per year. due to a recession, Polaski Company expects to sell only 24,000 Rets through regular channels ed to purchase 16,000 Rets if Polaski is willing to accept a price lower than the regular $72. There n this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Compan cial machine to engrave the retail chain's name on the 16,000 units. This machine would cost $3. 1o assurance that the retail chain will purchase additional units any time in the future. Determine n offer to this large retail chain in order for it to be no worse off compared to its current profit. (Da alculations. Round your percentage answer to nearest whole number.) nt

ally sell for $72 each. Fixed manufacturing overhead is constant at $580,000 per year within the Rets per year. due to a recession, Polaski Company expects to sell only 24,000 Rets through regular channels ed to purchase 16,000 Rets if Polaski is willing to accept a price lower than the regular $72. There n this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Compan cial machine to engrave the retail chain's name on the 16,000 units. This machine would cost $3. 1o assurance that the retail chain will purchase additional units any time in the future. Determine n offer to this large retail chain in order for it to be no worse off compared to its current profit. (Da alculations. Round your percentage answer to nearest whole number.) nt

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Lusk Corporation produces and sells 14,000 units of Product X each month. The selling price of…

A: In accounting, the term "product cost" refers to the total expenses incurred when making and…

Q: The company incurs costs of $27.7 million regardless of the output level. It sells 5.68 million…

A: GivenSales units = 5.68 MPrice = 8.79Variable Cost =10.20 mcontribution ratio = (sales price -…

Q: The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim…

A: The break-even points point in units can be found by using the following formula:The dollar value…

Q: You just graduated and started your new job. Your starting salary is $70,000/year. Your…

A: Given that, Starting salary = $70000 per year To 401(k) plan, Employer contributes = 2% of salary…

Q: Coney Adventures Inc. sells one product for $5. The variable cost per item is $3, and the fixed…

A: Coney Adventures Inc. sells its product at $ 5 per unit which has a variable cost of $ 3 and has a…

Q: am tubs per month. Each tub costs $10 in the market while the producer faces variable co tub. (a)…

A: Break even point production level is where there is no profit and no loss for Company.

Q: Sunshine Company’s single product has a selling price of P25 per unit. Last year the company…

A: Required sales in units can be calculated by dividing sum of fixed cost and profit with contribution…

Q: Management at the Flagstaff Company currently sells its products for $250 per unit and is…

A: Variable cost per unit = current sales price x 30% = $250 x 30% = $75 per unit Budgeted sales price…

Q: Excel hardware is introducing a new product on a new product line of capacity 1013 units per week at…

A: Net Income is part of profit which excludes all the cost which is incurred for doing the sales of…

Q: Lindon Company is the exclusive distributor for an automotive product that sells for $54.00 per unit…

A: Breakeven is the point at which an entity is neither earning nor losing anything. At this point, an…

Q: PQ Company currently sells a piece of equipment for $150 per unit. It plans on lowering the price…

A: Sales depends on the price of products and sales increases with decreases in the prices and hence…

Q: Lindon Company is the exclusive distributor for an automotive product that sells for $32.00 per unit…

A: The break-even sales are calculated as the fixed costs divided by the contribution margin ratio. The…

Q: Marston Company sells a single product at a sales price of $50 per unit. Fixed costs total $15,000…

Q: XYZ company currently sells 15,000 units a month for $50 each, has variable costs of $20 per unit,…

A: Contribution margin is the price of the product deduct all the linked variable costs, results from…

Q: he company sales price is $35 per unit. The variable cost of production bowties is $21 per unit. The…

A: Solution:- Break-even point =Fixed cost / Contribution per unit…

Q: Tech Solutions is a consulting firm that uses job-order costing. Its direct materials consist of…

A: Predetermined overhead rates are allocation rates applied to cost objects for a given reporting…

Q: Blossom Inc. currently grants no credit, but it is considering offering new credit terms of net 30.…

A: Here,Increase in Sales Price is $2Original sales Price is $40Increase in Sales Unit is 1,000Original…

Q: Sheldon's Company is the exclusive distributor for an automotive product that sells for $56.00 per…

A: The break-even point indicates that total units are to be sold by the business entity to recover the…

Q: Redlands Inc. sells one product for $5. The variable cost per item is $3, and the fixed costs for…

A: The differential analysis is performed to analyse the different alternatives available to the…

Q: Lusk Corporation produces and sells 15,000 units of Product X each month. The selling price of…

A: Solution: Contribution margin lost if discontinued = CM per unit * units = (40-32)*15000 = 120,000

Q: Accents Associates sells only one product, with a current selling price of $160 per unit. Variable…

A: Contribution per unit = Selling price per unit- variable cost per unit= $160- ($160*20%)= $128

Question

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell
40,000 Rets per year. Costs associated with this level of production and sales are as follows:
Unit
Total
Direct materials
$20.50
2$
820,000
540,000
340,000
580,000
160,000
240,000
Direct labour
13.50
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling expense
Fixed selling expense
8.50
14.50
4. ০0
6.00
Total cost
$67.00
$2,680,000
The Rets normally sell for $72 each. Fixed manufacturing overhead is constant at $580,000 per year within the range of 24,000
through 40,000 Rets per year.
Required:
1. Assume that, due to a recession, Polaski Company expects to sell only 24,000 Rets through regular channels next year. A large retail
chain has offered to purchase 16,000 Rets if Polaski is willing to accept a price lower than the regular $72. 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 16,000 units. This machine would cost $32,000. Polaski
Company has no assurance that the retail chain will purchase additional units any time in the future. Determine the maximum discount
that Polaski can offer to this large retail chain in order for it to be no worse off compared to its current profit. (Do not round
intermediate calculations. Round your percentage answer to nearest whole number.)
Maximum discount

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A compnay distributes a single product whose selling price is $16 per unit and whose variable expense is $12 per unit. The compnays monthly fixed expense is $10,800. Calculate the company's break even point in unit sales. Calculate the copmany's break even point in dollar sales. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? in dollar sales? Break-Even point in unit sales _________________baskets Break-Even point in dollar sales Break-Even point in unit sales _________________baskets Break-Even point in dollar sales
The Warren Watch Company sells watches for $26, fixed costs are $150,000, and variable costs are $15 per watch. What is the firm's gain or loss at sales of 8,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent.$ What is the firm's gain or loss at sales of 16,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent.$ What is the break-even point (unit sales)? Round your answer to the nearest whole number.units What would happen to the break-even point if the selling price was raised to $31? What would happen to the break-even point if the selling price was raised to $31 but variable costs rose to $21 a unit? Round your answer to the nearest whole number.
Braile Gear Works sells a single gear for a price of $73.00 per unit. The variable costs of the gear are $41.00 per gear and annual fixed costs are $548,800. Required: a. What is the break-even level of annual sales for Braile Gear Works? b. The cost analyst tells you that, based on the price and cost information of the gear and the marketing department's sales projection for next year, the margin of safety percentage is 30 percent. How many units does marketing expect to sell next year? Note: Do not round intermediate calculations. Break-even level Number of units to be sold parts
Lindon Company is the exclusive distributor for an automotive product selling for $22.00 per unit with a CM ratio of 30%. The company's fixed expenses are $105,600 per year and it plans to sell 17,400 units this year. Required: 1. What are the variable expenses per unit? Note: Round your "per unit" answer to 2 decimal places. 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $39,600 per year? 4. Assume by using a more efficient shipper, the company can reduce its variable expenses by $2.20 per unit. What is the company's new break-even point in unit sales and dollar sales? What dollar sales are required to attain a target profit of $39,600? 1. Variable expense per unit 2. Break-even point in units 2. Break-even point in dollar sales 3. Unit sales needed to attain target profit 3. Dollar sales needed to attain target profit 4. New break-even point in unit sales 4. New break-even point…
Phan Company has not reported a profit in five years. This year the company would like to narrow its loss to $7,500. Assuming its selling price is $36.50 per unit and its variable costs per unit are $24, how many units must be sold to achieve its target given that total fixed costs are $60,000?
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses. Contribution margin Fixed expenses Net operating income. Total $ 300,000 210,000 90,000 74,400 $ 15,600 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each month to attain a target profit of $29,400? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units thereby increasing sales by $60,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Req 1 Per Unit $ 20 14 $6 Complete this question by…
Blossom Footballs, Inc., management expects to sell 15,000 balls this year. The balls sell for $105 each and have a variable cost per unit of $71. Fixed costs, including depreciation and amortization, are currently $180,000 per year. How much can either the fixed costs or the variable cost per unit increase before the company has a negative EBIT. (Round increase in fixed cost to 0 decimal places, e.g. 5,275 and variable cost to 2 decimal places, e.g. 15.25.)Excel Template(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Fixed costs could increase by $ and variable costs could increase by $ per unit
Phan Company has not reported a profit in five years. This year the company would like to narrow its loss to $18,000. Assuming its selling price is $42.50 per unit and its variable costs per unit are $30, how many units must be sold to achieve its target given that total fixed costs are $69,000? (Do not round intermediate calculations.) ook Multiple Choice rences 4,448 5,520 3,712 4,080
The Warren Watch Company sells watches for $29, fixed costs are $180,000, and variable costs are $10 per watch. What is the firm's gain or loss at sales of 7,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent.$ What is the firm's gain or loss at sales of 15,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent.$ What is the break-even point (unit sales)? Round your answer to the nearest whole number.units
Outback Outfitters sells a small camp stove for $150 per unit. Variable expenses are $105 per unit, and fixed expenses total $184,500 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume the fixed expenses remain unchanged.) 3. At present, the company is selling 10,000 stoves per month. The sales manager is convinced a 10% reduction in the selling price would result in a 25% increase in unit sales. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. 4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $79,000 per month? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Break-even…
Moon produces and sells a single product and faces an inelastic demand curve meaning it can sell as many units as it wants without affecting the selling price. Moon has a cost structure consisting of fixed costs that are incurred each month and a variable cost of $12 per unit produced that is independent of (i.e. does not vary with) the number of units produced. Moon's ncome tax rate is 30 percent and its breakeven quantity is 24,000 units each month. If Moon produces 30,000 units during the month it has after tax net income of $33,600. Calculate Moon's selling price and monthly fied costs.
Lusk Corporation produces and sells 14,300 units of Product X each month. The selling price of Product X is $25 per unit, and variable expenses are $19 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $72,000 of the $102,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company