Q2. The Tesla Winery is one of the nest and oldest wineries in the country. One of its most famous products is a red table wine called Olen Millot. The wine is made from Olen Millot grapes grown in the Hudson River Valley. Recently, management has become concerned about the increasing cost of making Olen Millot and needs to determine if the current $10 per bottle selling price is adequate. The winery wants to achieve a 25 percent gross prot on the sale of each bottle of wine. The information below is given to you for analysis. 1. Compute the unit cost per bottle for materials, labor and manufacturing overhead. 2. What would you advise management regarding the price per bottle of Olen Millot wine? Defend your answer. 3. Compute the prime costs per unit and conversion costs per unit. Batch size 10,550 bottles Costs Direct Ma teri'a J's Olen Millot grapes $22,155 Chancellor grapes 9,495 Bottles 5,275 Total direct materials costs $36,925 Direct Labor Pickersfloaders Crusher Processors Bottler Storage and racking Total direct labor costs 2,110 422 8,440 1,688 11,605 $24,265 Montgfacmring Overhead Depreciation, equipment 2,743 Depreciation, building 5,275 Utilities 1 ,055 Indirect Labor 6,330 Supervision 7,385 Supplies 3 ,165 Storage xtures 2,532 Chemicals 4,220 Repairs 1,477 Miscellaneous 63 3 Total manufacturing overhead costs $34,8 15 TOTAL PRODUCTION COSTS $96,005 Page 2 of 13