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3: Water Technology, Inc., incurred the following costs during 20x1. The company sold all of its products manufactured during the year. 4,000,00 Direct material Direct
3: Water Technology, Inc., incurred the following costs during 20x1. The company sold all of its products manufactured during the year. 4,000,00 Direct material Direct labor Manufacturing overhead: 2,400,00 0 Utilities (primarily electricity) 140,000 Depreciation on plant and equipment 230,000 Insurance 170,000 Supervisory salaries 200,000 Property taxes 210,000 Selling costs: Advertising 175,000 Sales commissions 70,000 Administrative costs: Salaries of top management and staff Office supplies 372,000 50,000 Depreciation on building and equipment 70,000 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. 1 Page
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