Make or Buy 2) Flying High Airline is holding discussions on whether it is beneficial for them to make their own in- flight meals in house rather than purchase them from a supplier. They have found that they can purchase the meals for $4 per meal. Flying high needs 30,000 in-flight meals per year. The costs associated with preparing these meals in house are as follows: Direct material $2.65/meal Direct labor $0.75/meal Variable overhead $0.9/meal Fixed overhead $2.4/meal The fixed overhead consists of: $36,000 for renting kitchen and storage space used to make the meal (the lease could be cancelled without penalty) $9,000 in equipment depreciation (the equipment has no resale value and no alternative use) $27,000 in allocated general overhead that would not be reduced in total if the meals were purchased. Should flying high accept the offer to buy the meals and what would the impact on profit be if they buy the meals. Special Order 3) Energy Source Industries normally usually charges $5.25 per gallon for its jet fuel. The variable cost of production is $2.75 per gallon and the variable selling cost is $0.5 per gallon. Annual fixed Manufacturing Costs are $1,300,000 and fixed selling and administration are $850,000. Flying High airline has approached Energy Source about buying 500,000 gallons at a price of $4.5 per gallon. The company's capacity is 4,000,000 gallons, and they are currently only selling 3,000,000 gallons. The variable selling cost of $0.5 per gallon will be avoided on the Flying High order. Assume existing sales will be unaffected by the special order. What will be the impact on profits from accepting the special order