Anderson Winery produces a red wine called Old Vines. Recently, management has become concerned about the increasing costs of making Old Vines and needs to determine if the current selling price of $10 per bottle is adequate. The winery wants to achieve a 25 percent gross profit on the sale of each bottle. The following information is given to you for analysis:

Batch size 6264 botles

Costs:

Total direct material costs $25056

Total direct labor costs $12528

Total overhead costs $21924

Total production costs $59508

1. Compute the unit cost per bottle for materials, labor and ovrhead

2. How would you advise management regarding the price per bottle of wine? (round to the nearest cent)

3. Compute the prime costs per unit and the conversion costs per unit