Water Technology, Inc., incurred the following costs during 20x1. The company sold all of its products...

     

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Water Technology, Inc., incurred the following costs during 20x1. The company sold all of its products manufactured during the year. Direct material Direct labor Manufacturing overhead: Utilities (primarily electricity) Depreciation on plant and equipment Insurance Supervisory salaries Property taxes Selling costs: Advertising Sales commissions Administrative costs: Salaries of top management and staff Office supplies Depreciation on building and equipment $5,000,000 2,200,000 140,000 220,000 170,000 200,000 220,000 175,000 80,000 371,000 35,000 80,000 During 20x1, the company operated at about half of its capacity, due to a slowdown in the economy. Prospects for 20x2 are slightly better. Jared Lowes, the marketing manager, forecasts a 20 percent growth in sales over the 20x1 level. Required: Categorize each of the costs listed below as to whether it is most likely variable or fixed. Forecast the 20x2 cost amount for each of the cost items listed. Water Technology, Inc., incurred the following costs during 20x1. The company sold all of its products manufactured during the year. Direct material Direct labor Manufacturing overhead: Utilities (primarily electricity) Depreciation on plant and equipment Insurance Supervisory salaries Property taxes Selling costs: Advertising Sales commissions Administrative costs: Salaries of top management and staff Office supplies Depreciation on building and equipment $5,000,000 2,200,000 140,000 220,000 170,000 200,000 220,000 175,000 80,000 371,000 35,000 80,000 During 20x1, the company operated at about half of its capacity, due to a slowdown in the economy. Prospects for 20x2 are slightly better. Jared Lowes, the marketing manager, forecasts a 20 percent growth in sales over the 20x1 level. Required: Categorize each of the costs listed below as to whether it is most likely variable or fixed. Forecast the 20x2 cost amount for each of the cost items listed.

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Variable Costs Direct material Variable cost depends on production level Direct labor Variable cost ... View the full answer