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Question 1 Herbal Hair is a company that produces shampoo. Hourly employees on the assembly line in the manufacture use machinery to pour the shampoo into the bottles. Hourly employees on the assembly line then put a sticker on the bottle and place the bottles in boxes. Salaried supervisors in manufacture oversee the process. The company hires Fed-Mex to ship the boxes filled with bottles of shampoo to local retailers such as Cool-Mart. Herbal Hair has a beautiful head office filled with salaried employees, such as accountants and lawyers. They outsource the marketing process to an external design company. Categorize the following costs as either fixed or variable. Explain whether they are direct, indirect, or overhead costs. 1. Empty plastic bottles 2. Machinery rental in the manufacture 3. Hourly employees in the head office 4. Salaried supervisors in the head office 5. Salary of janitor in the manufacture 6. Shipping costs 7. Electricity costs for the manufacture 8. Rent for the head office 9. Hourly wage of assembly line workers in the manufacture 10. Liquid shampoo 11. Salary of Lawyers 12. Salary of CEO Herbal Hair's demand for bottles of shampoo was 12,000 units. The CEO asked the accountant about the expected cost for the sales-order activity. A new software had been installed, and the CEO wanted to know how the software affects costs. The average sales order is for 15 units. The software requires a computer (3 min per order) and processing labour (7 min per order). The computer is leased at a cost of $1,500 per 8 hours. Salaries are $1,200 per hour. What is the cost allocation: Computer per order? Computer per unit? Labor per order? Labor per unit? They plan on selling 1050 bottles every quarter Q1-Q2-Q3 at a cost of 18$ per bottle. They plan on selling 2550 bottles at Q4 at a cost of 16$ per bottle. Prepare the Sales Budget They would desire a finished goods inventory of 105 bottles every quarter Q1-Q2, and 155 bottles for Q3 and 24. The beggining inventory is 20 in Q1, as this is a popular model. Prepare the Production Budget They need 1 sticker (units of raw materials) to produce a label for each bottle of shampoo. They desire an end inventory for the labels of 35 stickers at the end of each quarter Q1-02-03, and 55 stickers at the end of Q4. The beggining inventory is 15 in Q1, as this is a popular model. A sticker costs 2$ to purchase. Prepare the Direct Materials Budget Herbal Hair hires students and pays them 16$/hour. A student spends 10 minutes to manufacture each bottle of shampoo. Prepare the Direct Labor Budget