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Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent Segmented income statements for a typical month appear as follows (all amounts in millions of dollars) yes Routes Sales Variable costs Fixed costs allocated to routes Operating profit (loss) Within U.S. $ 3.16 1.39 1.61 $ 0.16 within Europe $ 2.82 0.97 1.27 $ 0.58 Between U.S. and Europe $ 2.87 1.77 1.37 $(0.27) Required: a. Prepare a differential cost schedule. (Select option "increase" or "decrease" keeping Status Quo as the base. Select "none" if there is no effect. Enter your answers in millions rounded to 2 decimal places.) Status Quo Alternative: Drop U.S. to Europe Difference Revenue Less. Variable costs Contribution margin Less Fixed costs Exercise 4-47 and 4.48 (Algo) (LO 4-4) [The following information applies to the questions displayed below) Part 1 of 2 0.66 points Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.74 each but is considering making them instead. Mel's can bake each cookle for $0.25 for materials, $0.15 for direct labor, and $0.51 for overhead without increasing its capacity. The $0.51 for overhead includes an allocation of $0.33 per cookie for fixed overhead. However, total fixed overhead for the company would not increase if Mel's makes the cookies. Mel himself has come to you for advice. "It would cost me $0.91 to make the cookies, but only $0.74 to buy Should I continue buying them?" Materials and labor are variable costs, but variable overhead would be only $018 per cookie. Two cookies are put into every lunch eBook References Exercise 4.47 (Algo) Make-or-Buy Decisions (LO 4-4) 2 Required: a. Prepare a schedule to show the differential costs per cookie. (Enter your answers to 2 decimal places. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status Quo Alternative (Buy) (Make) Ditterence Cost to buy Direct material Direct labor Vanable overhead Total costs 8 Part 2 of 2 Required information Exercise 4-47 and 4-48 (Algo) (LO 4.4) The following information applies to the questions displayed below) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.74 each but is considering making them instead. Mel's can bake each cookie for $0.25 for materials, $0.15 for direct labor, and $0.51 for overhead without increasing its capacity. The $0.51 for overhead includes an allocation of $0.33 per cookie for fixed overhead. However, total fixed overhead for the company would not increase if Mel's makes the cookies. 0.78 points eBook Mel himself has come to you for advice. "It would cost me $0.91 to make the cookies, but only $074 to buy. Should I continue buying them?" Materials and labor are variable costs, but variable overhead would be only $0.18 per cookie. Two cookies are put into every lunch. References Exercise 4-48 (Algo) Make or Buy with Opportunity Costs (LO 4.4) Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from the dinners would amount to $3,300 annually. Required: a. Mel decides to sell dinners, what are the total costs for both making and buying the cookies? Total cost of making cookies Total cost of buying cookies