Chapter 2, Problem 51P

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

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 above as to whether it is most likely variable or fixed. Forecast the 20x2 cost amount for each of the cost items listed above.