1.Reconsider the product line Income Statement shown in Table 1. Using the contribution margin approach, what is the Bubbs total contribution margin for the year?

2.Reconsider the product line Income Statement shown in Table 1. Using the contribution margin approach, deduct the estimated annual fixed production costs from the total contribution margin to determine a new product-line margin. If the product line contribution margin is a loss, express your answer as a negative number, such as -5000.

Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $5.25 per case, has not had the market success that managers expected, and the company is considering dropping Bubbs. Table 1. Product Line Income Statement for Bubbs - 12 months Revenue $14,682,150 Costs Manufacturing costs $14.440.395 Allocated corporate costs 734,108 15,174,503 Product line margin ($492,353) Allowance for tax (20%) 98,470 Product-line profit (loss) ($393,883) Additional Information: 1. The product-line income statement for the past 12 months is shown in Table 1. 2. All products at Luke receive an allocation of corporate overhead costs, which is computed as 5 percent of the product's gross revenue. The 5 percent rate is based on the most recent year's corporate costs divided by corporate revenues. Data on corporate costs and revenues for the past two years are shown in Table 2. You may assume the fixed corporate overhead is $1,454,000 in each year. None these fixed costs are specifically traceable to Bubbs. Table 2 Corporate Revenues Most recent year $106,750,000 Previous year $76,200,000 Fixed Corporate OH is $1,454,000 in each year OH Costs $5.337.500 $4,221,000 3. Roy O. Andre, the product manager for Bubbs, is concerned about whether the product will be dropped by the company and has employed you as a financial consultant to help with some analysis. In addition to the information given above, Mr. Andre provides you with the data in Table 3 on the Bubbs monthly product costs. 4. Table 4 presents the results of a regression analysis of the data in Table 3. Table 4 Regression Analysis of Table 3 Monthly Production Data Table 3. Monthly Production and Production Costs Month Cases Prod. Costs 1 207,000 $ 1,139,828 2 217,200 $ 1,161,328 3 214,800 $ 1,169,981 4 228,000 S 1,185,523 5 224,400 $ 1,187,827 6 237,000 $ 1,208,673 7 220.200 $ 1,183,699 8 247,200 $ 1,226,774 9 238,800 S 1.225.226 10 252,600 $ 1,287,325 11 250,200 $ 1,241,760 12 259,200 $ 1,272,451 0.962 Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.925 0.918 12,833.693 12.000 t Stat Intercept Cases Coefficients 613,850 2.5474 Standard Error 53,525 0.23 11.47 11.12 P-value 0.0000 0.0000 Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $5.25 per case, has not had the market success that managers expected, and the company is considering dropping Bubbs. Table 1. Product Line Income Statement for Bubbs - 12 months Revenue $14,682,150 Costs Manufacturing costs $14.440.395 Allocated corporate costs 734,108 15,174,503 Product line margin ($492,353) Allowance for tax (20%) 98,470 Product-line profit (loss) ($393,883) Additional Information: 1. The product-line income statement for the past 12 months is shown in Table 1. 2. All products at Luke receive an allocation of corporate overhead costs, which is computed as 5 percent of the product's gross revenue. The 5 percent rate is based on the most recent year's corporate costs divided by corporate revenues. Data on corporate costs and revenues for the past two years are shown in Table 2. You may assume the fixed corporate overhead is $1,454,000 in each year. None these fixed costs are specifically traceable to Bubbs. Table 2 Corporate Revenues Most recent year $106,750,000 Previous year $76,200,000 Fixed Corporate OH is $1,454,000 in each year OH Costs $5.337.500 $4,221,000 3. Roy O. Andre, the product manager for Bubbs, is concerned about whether the product will be dropped by the company and has employed you as a financial consultant to help with some analysis. In addition to the information given above, Mr. Andre provides you with the data in Table 3 on the Bubbs monthly product costs. 4. Table 4 presents the results of a regression analysis of the data in Table 3. Table 4 Regression Analysis of Table 3 Monthly Production Data Table 3. Monthly Production and Production Costs Month Cases Prod. Costs 1 207,000 $ 1,139,828 2 217,200 $ 1,161,328 3 214,800 $ 1,169,981 4 228,000 S 1,185,523 5 224,400 $ 1,187,827 6 237,000 $ 1,208,673 7 220.200 $ 1,183,699 8 247,200 $ 1,226,774 9 238,800 S 1.225.226 10 252,600 $ 1,287,325 11 250,200 $ 1,241,760 12 259,200 $ 1,272,451 0.962 Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.925 0.918 12,833.693 12.000 t Stat Intercept Cases Coefficients 613,850 2.5474 Standard Error 53,525 0.23 11.47 11.12 P-value 0.0000 0.0000