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Help Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new

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Help 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 $5.75 per case, has not had the market success that managers expected and the company is considering dropping Bubbs. The product-line income statement for the past 12 months follows: Revenue $ 14, 697, 150 Costs Manufacturing costs $ 14, 445, 395 Allocated corporate costs (@5%) 734, 858 15, 180, 253 Product- line margin A (483, 103) Allowance for tax (@20%) 96, 620 Product-line profit (loss) (386, 483) All products at Luke receive an allocation of corporate overhead costs, which is computed as 5 percent of product revenue. The 5 percent rate is computed based on the most recent year's corporate cost as a percentage of revenue. Data on corporate costs and revenues for the past two years follow: Corporate Revenue Corporate Overhead Costs Most recent year $ 116, 750, 000 $ 5, 837, 500 Previous year 77, 200, 000 4, 935, 760 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, Mr. Andre provides you with the following data on product costs for Bubbs

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