The following information is available for Year 1 for Solano Products:

Revenues (100,000 units)		$725,000
Manufacturing Costs:
Materials (variable)	$42,000
Variable Costs (other)	$35,600
Fixed Costs (excluding depreciation)	$81,900
Depreciation (fixed)	$249,750	$409,250
Marketing & Administrative Costs:
Marketing (variable)	$105,600
Depreciation of Marketing Buildings and Equipment	$37,400
Administrative (fixed) (excluding depreciation)	$127,300
Administrative Depreciation	$18,700	$289,000
Total Costs		$698,250
Operating Profits		$26,750

All depreciation costs are fixed and are expected to remain the same for Year 2. Management expects sales volume to increase by 10 percent, and sales prices per unit to increase by 5 percent in Year 2 compared to Year 1. Management expects materials and other variable manufacturing costs to increase by 5 percent. Management expects variable marketing costs to increase 1 percent per unit and all fixed costs, excluding depreciation, to increase 3 percent in Year 2 compared to Year 1.

Prepare a master budget profit plan for Year 2. Use a format similar to the one shown in Exhibit 9.7. Management wants to increase profits by 20 percent over Year 1's budget of $26,750. According to your budget, are profits expected to increase by 20 percent? Why or why not?