Draaksh Corporation sells premium quality wine for $115 per bottle. Its direct materials and direct labour costs are $22 and $12.50 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 suff 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 cost per bottle and the expected contribution margin ratio.
