Draaksh Corporation sells premium quality wine for $95 per bottle. Its direct materials and direct labour costs are $18 and $10.50 respectively per bottle. It pays its direct labour employees a wage of $21 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 = $152,700 + $21.00x

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 $33,800 per month for sales promotions; additionally, it has decided to offer a sales commission of $5.00 per bottle to its sales personnel. Administrative expenses are expected to be $24,900 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. (Round your intermediate and final answers to the whole number.)

3. Draaksh has budgeted sales of $8.4 million for the next fiscal year. What is the companys margin of safety in dollars and as a percentage of budgeted sales? (Round your intermediate and final answers to the whole number.)

4. This part of the question is not part of your Connect assignment.