7. The human resources department of Consumer Cosmetics has responsi- bility for all aspects of payroll and ongoing management of the HR func- tion, hiring new employees, and terminations. The departmental report for 2020 included the following: Average number of company employees in 2020 Number of new hires Number of terminations Number of HR employees HR department costs Salaries Employee-related overhead (25% of HR salaries) Office expenses Travel & interview costs Advertising Total actual cost 5,000 500 50 100 $5,000,000 1,250,000 5,000,000 1,000,000 500,000 $12,750,000 In 2021, it is expected that the number of employees will rise to 5,500; there will be 400 new employees hired and no terminations. Inflation will run at 2% for all costs.

Required (a) What assumptions do you have to make before you can plan your budget for 2021 ? (b) Using those assumptions, prepare a budget for 2021