Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017. Classification All variable Account Amount Direct materials Direct manufacturing labor Power $300,000 225,000 37,500 56,250 All variable All variable Supervision labor Materials-handing latbor Maintenance labor Depreciation Rent, property taxes, and administration 20% variable 50% variable 60,000 75,000 95,000 100,000 40% variable 0% variable 0% variable Gower, Inc., produced 75,000 units of product in 2017. Gower's management is estimating costs for 2018 on the basis of 2017 numbers. The following additional information is available for 2018. a. Direct materials prices in 2018 are expected to increase by 5% compared with 2017. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2018 compared with 2017. c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018. d. Depreciation costs are expected to increase by 5%, and rent, property taxes, and administration costs are expected to increase by 7%. e. Gower expects to manufacture and sell 80,000 units in 2018.

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