PLEASE SHOW EQUATIONS TO GET ANSWERS________________________________________

All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 5 percent, but prices are expected to rise by 15 percent. Material costs per unit are expected to increase by 12 percent. Other unit variable manufacturing costs are expected to decrease by 10 percent per unit. Fixed cash costs are expected to increase by 4 percent. Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.

INFORMATION AVAILABLE FOR YEAR 1 FOR PEPPER PRODUCTS

Sales Revenue (200,000) units. $2,850,000

Manufacturing Costs

Materials $168,000

Variable Cash Costs 142,400

Fixed Cash Costs 327,600

Depreciation (fixed) 999,000

Marketing and Administrative Costs

Marketing (variable, cash) 422,400

Marketing depreciation 149,600

Administrative (fixed, cash) 509,200

Administrative depreciation 74,800

Total Costs $2,793,000

Operating Profits $ 57,000

Prepare a budged income statement for year 2.