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

Direct material $ 5,000,000

Direct labor 2,100,000

Manufacturing overhead:

Utilities (primarily electricity) 140,000

Depreciation on plant and equipment 240,000

Insurance 180,000 Supervisory salaries 400,000

Property taxes 210,000 Selling costs: Advertising 165,000

Sales commissions 90,000

Administrative costs:

Salaries of top management and staff 372,000

Office supplies 35,000

Depreciation on building and equipment 75,000

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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.

Variable or fixed

20x2 forcast

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