Draaksh Corporation sells premium quality wine for $115 per bottle. Its direct materials and direct labour costs are $22 and $19 respectively per bottle. It pays its direct labour employees a wage of $25 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:

y= $154,700 + $23.00x

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 $34,600 per month for sales promotions; additionally, it has decided to offer a sales commission of $6.00 per bottle to its sales personnel. Administrative expenses are expected to be $25,300 per month.

Required:

1. Compute the expected total variable costper bottleand the expected contribution margin ratio.

2. Compute theannualbreak-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?