[The following information applies to the questions displayed below. Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates Sales revenues (13,500 units) $1,215,000 costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) $ 217000 295,000 17000 45,000 Marketing and administrative costs 148.000 35,000 140,000 $ 13,000 $ 1.110,000 $ 105,000 Marketing (variable, cash) Administrative (fixed, cash) Administrative depreciation Total costs Operating profits All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,650 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,100. Sales volume and prices are expected to increase by 11 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 9 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 6 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 7 percent. Inventories are kept at zero. Gulf States operates on a cash basis