Draaksh Corporation sells premium quality wine for $110 per bottle. Its direct materials and direct labour costs are $21 and $12.00 respectively per bottle. It pays its direct labour employees a wage of $24 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 = $154,200 + $22.50x 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 $34,400 per month for sales promotions; additionally, it has decided to offer a sales commission of $5.75 per bottle to its sales personnel. Administrative expenses are expected to be $25,200 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.)
Draaksh Corporation sells premium quality wine for $110 per bottle. Its direct materials and direct labour costs are $21 and $12.00 respectively per bottle. It pays its direct labour employees a wage of $24 per hour.
The company performed a regression analysis using the past 12 months’ data and established the following monthly cost equation for
y = $154,200 + $22.50x
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 $34,400 per month for sales promotions; additionally, it has decided to offer a sales commission of $5.75 per bottle to its sales personnel. Administrative expenses are expected to be $25,200 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.)
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Draaksh has budgeted sales of $8.7million for the next fiscal year. what is the companys margin of safety in dollars and as a percentage of budgeted sales?
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