The following information is available for year 1 for Pepper Products Sales revenue (110,000 units) Manufacturing costs $2,200,000 Materials Variable cash costs Fixed cash costs Depreciation (fixed) $ 131,000 112,000 258,000 787,000 Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation 332.000 117,000 398,000 59,000 $2,194,000 $ 6,000 Total costs Operating profits All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 7 percent, but prices are expected to rise by 10 percent. Material costs per unit are expected to increase by 14 percent Other unit variable manufacturing costs are expected to decrease by 5 percent per unit. Fixed cash costs are expected to increase by 6 percent Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 7 percent Inventories are kept at zero. Pepper Products operates on a cash basis