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A XV fx B C D E F G H Draaksh Corporation sells premium quality wine for $50 per bottle. Its direct materials and
A XV fx B C D E F G H Draaksh Corporation sells premium quality wine for $50 per bottle. Its direct materials and direct labour costs are $9 and $6 respectively per bottle. It pays its direct labour employees a wage of $12 per hour. The company performed a regression analysis using the past 12 months' data and established the following monthly cost equation for manufacturing overhead costs using direct labour-hours as the overhead allocation base 1-$148,200 $16.50x Draaksh believes that the above cost estimates will not substantially change for the next fiscal year. Given the stiff competition in the wine market. Draaksh budgeted an amount of $32.000 per month for sales promotions, additionally it has decided to offer a sales commission of $2.75 per bottle to its sales personnel. Administrative expenses are expected to be $24.000 per month. Required: 1. Compute the expected total variable cost per bottle and the expected contribution margin ratio 2. Compute the annual break-even sales in units and dollars 3. Draaksh has budgeted sales of $7.5 million for the next fiscal year What is the company's margin of safety in dollars and as a percentage of budgeted sales? 4. As the marketing manager of Draksh how can you use the information reparting the margin of safety in your planning
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