Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:

Sales Revenue (37500) $2,500,000

Manufacturing cost

Material $ 400,000

Variable Cash Costs 545,000

Fixed Cash Costs 216,000

Depreciation (fixed) 267,000

Maketing and administrative costs

Marketing (variable, cash) 285,000

Marketing depreciation 67,800

Administrative (fixed, cash) 270,300

Administration Depreciation 25,200

Total Costs $ 2076,300

Operating Profits $ 423,700

Additional information

- Annual Depreciation on old manufacturing equipment $ 29,100

- Annual Depreciation on new equipment acquired in year 2 $ 42,000

Year 2 expectation

- % increase in sales volume 8%

- % increase in prices 3%

- % increase in material cost per unit 6%

- % decrease in other unit variable manuf. cost per unit 5%

- % decrease in fixed cash manufacturing costs 9%

- % increase in administrative cash costs 10%

Required:

Prepare a budgeted income Statement for year 2

All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will