Subject: acounting Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell42,000 Rets per year. Costs associated with this level of production and sales are given belowDirect materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling expenseFixed selling expenseTotal costUnit$ 20103541263.$48Total$ 840,000420,000126,000The Rets normally sell for $53 each. Fixed manufacturing overhead is $210,000 per year within the range of 36,000 through 42,000Rets per year.210,000168,000252,000$ 2,016,000Required:1. Assume that due to a recession, Polaski Company expects to sell only 36,000 Rets through regular channels next year. A large retailchain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. 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 6.000 units. This machine would cost $12,000. Polaski Companyhas no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) ofaccepting the special order? (Round your intermediate calculations to 2 decimal places.)2. Refer to the original data. Assume again that Polaski Company expects to sell only 36,000 Rets through regular channels next year.The U.S. Army would like to make a one-time-only purchase of 6,000 Rets. The Army would reimburse Polaski for all of the variableand 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 associatedwith 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 that the company expects to sell 42,000 Rets through regular channelsnext year. Thus, accepting the U.S. Army's order would require giving up regular sales of 6.000 Rets. Given this new information, whatis the financial advantage (disadvantage) of accepting the U.S. Army's special order?

Name: Subject: acounting Polaski Company manufactures and sells a single pro
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Description: Subject: acounting Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell42,000 Rets per year. Costs associated with this level of production and sales are given belowDirect mater

while compute the financial advantage or (Disadvantage) of accepting special order we should compare…

Business

Accounting

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 10 3 5 4 6 $48 Total $ 840,000 420,000 126,000 210,000 168,000 252,000 $2,016,000 The Rets normally sell for $53 each. Fixed manufacturing overhead is $210,000 per year within the range of 36,000 through 42,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 36,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales

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 10 3 5 4 6 $48 Total $ 840,000 420,000 126,000 210,000 168,000 252,000 $2,016,000 The Rets normally sell for $53 each. Fixed manufacturing overhead is $210,000 per year within the range of 36,000 through 42,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 36,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure. 

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.

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Question

Subject: acounting

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
10
3
5
4
1
2
6
3.
$48
Total
$ 840,000
420,000
126,000
The Rets normally sell for $53 each. Fixed manufacturing overhead is $210,000 per year within the range of 36,000 through 42,000
Rets per year.
210,000
168,000
252,000
$ 2,016,000
Required:
1. Assume that due to a recession, Polaski Company expects to sell only 36,000 Rets through regular channels next year. A large retail
chain has offered to purchase 6,000 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 6.000 units. This machine would cost $12,000. 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? (Round your intermediate calculations to 2 decimal places.)
2. Refer to the original data. Assume again that Polaski Company expects to sell only 36,000 Rets through regular channels next year.
The U.S. Army would like to make a one-time-only purchase of 6,000 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 that 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 6.000 Rets. Given this new information, what
is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

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