1.

Franklin, Incorporated has two divisions, Seward and Charles. The following is the contribution margin income statement for the previous year:

	Seward	Charles
Sales revenue	$ 600,000	$ 400,000
Variable costs	195,000	250,000
Contribution margin	$ 405,000	$ 150,000
Fixed costs	175,000	170,000
Net operating income (loss)	$ 230,000	$ (20,000)

Of the total fixed costs, $300,000 are common fixed costs that are allocated equally between the divisions. What would Franklin's income (loss) be if the Charles Division were dropped?

2.

Skybird Incorporated has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, and September 7,500 units. Skybird's ending finished goods inventory policy is 40% of the next month's sales. July 1 inventory is projected to be 1,500 units. Monthly costs are budgeted as follows:

Fixed manufacturing costs	$ 17,000
Fixed selling costs	10,000
Fixed administrative costs	8,300
Variable manufacturing costs	6	per unit produced
Variable selling costs	3	per unit sold

What is the budgeted manufacturing overhead for July?