Health hearth specialized in lunches for health conscious. The company produces small section of lunch offering each day. The menu selections may vary from day to day, but healthy hearth charges the same price per menu selection because it adjusts the portion sizes according to the cost of producing the selection. Healthy hearth currently sells 5,000 meals per month. Variable costs are $ 3 per meal, and fixed costs total $5000 per month. A government agency has recently proposed that Healthy hearth provide 1,000 meals next month for senior citizens at $ 3.50 per meal. Volunteers will deliver the meal to the senior citizens at no charge.

a. Suppose healthy hearth has sufficient idle capacity to accommodate the government order for next month. What will be the impact on Health hearth is operating income if it accepts this order?

b. Suppose that healthy hearth would have to give up regular sales of 500 meals at a price of $ 4.50 each to accommodate the government order for next month. What will be the impact on healthy hearth is operating income if it accepts government order?