Required information Problem 13-53 & 13-54 (Algo) (LO 13-4, 5, 6) [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 (16,500 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits $1,485,000 $ 265,000 361,000 144,000 178,000 184,000 44,000 176,000 $ 16,000 $1,368,000 117,000 $ All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,950 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,400. Sales volume and prices are expected to increase by 8 percent and 4 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 6 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 4 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 4 percent. Inventories are kept at zero. Gulf States operates on a cash basis.