Salaries paid to CEO and CFO ($500,000).* Hourly wages paid to line workers at plant ($250,000).* Salaries paid to bumper sticker designers ($325,000).* Salary paid to production manager at plant ($110,000).* Hourly wages paid to office secretarial staff ($72,000).* Depreciation on headquarters office furniture ($10,000). Depreciation on manufacturing equipment ($20,000). Cost of paper and ink for stickers ($440,000). Shipping costs paid to UPS for delivery ($5,000). Cost of advertising ($100,000). Cost of utilities at manufacturing plant ($20,000).** During 2020, a Chicago alderman places an order with Political Prints for 25,000 custom campaign bumper stickers. The direct materials cost for this order is $4,200 and the direct labor cost for this order is $600. It takes 8 design hours to complete the job. Total overhead costs Political Prints applies to the Chicago alderman job = Political Prints' cost per bumper sticker for the Chicago Alderman job = PROBLEM 1 - COST CONCEPTS & ALLOCATIONS Political Prints designs and produces custom bumper stickers for political campaigns. Below is a list of the company's estimated costs - the $ amount in parentheses is the estimated 2020 cost. PART A: CLASSIFYING COSTS Classify each cost as (a) variable or fixed and (b) product or period. I've completed the first one for you. Variable Cost Product Cost or Fixed Cost? or Period Cost? Salaries paid to CEO and CFO ($500,000).* Fixed Period Hourly wages paid to line workers at plant ($250,000). Salaries paid to bumper sticker designers ($325,000).* Salary paid to production manager at plant ($110,000).* Hourly wages paid to office secretarial staff ($72,000).* Depreciation on headquarters office furniture ($10,000). Depreciation on manufacturing equipment ($20,000). Cost of paper and ink for stickers ($440,000). Shipping costs paid to UPS for delivery ($5,000). Cost of advertising ($100,000). Cost of utilities at manufacturing plant ($20,000)." *Political Prints is able to adjust the hours worked by line workers and office secretarial staff based on the number of orders. The plant production manager, designers, CEO and CFO are paid a yearly salary. ** Political Prints'utility company charges solely based on usage (ie, there is no flat-fee component to their utility bill). PART B: CALCULATING & USING PRE-DETERMINED OVERHEAD RATE Political Prints pools overhead costs together into one cost pool. Included in this cost pool are (1) the salary paid to the plant production manager, (2) depreciation on manufacturing equipment, and (3) the cost of utilities at the manufacturing plant. The cost driver used to allocate overhead is design hours. Political Prints estimates that there will be 6,000 total design hours during 2020. Political Prints' 2020 pre-determined overhead rate = During 2020, a Chicago alderman places an order with Political Prints for 25,000 custom campaign bumper stickers. The direct materials cost for this order is $4,200 and the direct labor cost for this order is $600. It takes 8 design hours to complete the job. Total overhead costs Political Prints applies to the Chicago alderman job Political Prints' cost per bumper sticker for the Chicago Alderman job