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Special Order Flying High Airlines needs a special order of 500,000 gallons of jet fuel...

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Accounting

Special Order

Flying High Airlines needs a special order of 500,000 gallons of jet fuel from Energy Source, a local supplier which Flying High usually does not do business with. Due to winter weather and poor travel conditions, Flying Highs regular shipment of fuel did not arrive. Flying High usually pays $4.50 per gallon under contract with their regular supplier and is not willing to pay Energy Source any more than that. Energy Source is a smaller producer and usually charges $5.25 per gallon. The companys budgeted income statement for the year is as follows:

Sales (1,130,000 gallons) $5,932,500

Variable COGS $3,107,500

Variable Selling & Administrative $565,000

Contribution Margin $2,260,000

Fixed Manufacturing Costs $1,300,000

Fixed Selling & Administrative $850,000

Net Income $110,000

How would accepting this order from Flying High affect Energy Sources net income?

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