1) Markson Company had the following results of operations for the past year:

Sales (8,000 units at $20.70)				$	165,600
Variable manufacturing costs	$	88,800
Fixed manufacturing costs		15,700
Variable selling and administrative expenses		14,800
Fixed selling and administrative expenses		20,700			(140,000	)
Operating income				$	25,600

A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $15.05 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,670 for the purchase of special tools. Marksons annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:

2) Granfield Company has a piece of manufacturing equipment with a book value of $36,000 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $21,200. Granfield can purchase a new machine for $112,000 and receive $21,200 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $18,200 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is: