13-40. Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October: Sales revenue (300 units @ $600 per unit) Less Manufacturing costs Variable costs Depreciation (fixed) Marketing and administrative costs Fixed costs (cash) Depreciation (fixed) Total costs Operating profits $180,000 26,000 27,540 67,500 22,860 $143,900 $ 36,100 Sales volume is expected to increase by 20 percent in November, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 4 percent per unit in November. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 8 percent. Cycle-1 operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years. Question 8: Compute budgeted gross profit (budgeted sales minus budgeted cost of goods manufactured and sold). Question 9: Compute budgeted operating profit (budgeted gross profit minus budgeted marketing and administrative costs).