Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

i need help with the section required D Integrative Cose 5-72 (Algo) Cost Estimation, CVP Analysis, and Decision Making (LO 5-4, 5,9) Loke Corporation produces

i need help with the section "required D" image text in transcribed
Integrative Cose 5-72 (Algo) Cost Estimation, CVP Analysis, and Decision Making (LO 5-4, 5,9) Loke 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 Bubbis, to sell in vending machines The product, which see for $6.00 per case, has not had the market success that managers expected and the company is considering dropping Bubbe The product line income statement for the past 12 months follows: Revenge $ 14,704,650 $ 14,447,995 735,233 Manufacturing costs Allocated corporate costs Product line margin Allowance for tal 2) Product line prorit (less) 15.103.125 (473,478) 95.69 302.703) All products at Luke receive an allocation of corporate overhead costs, which is computed a 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 Date on corporate costs and revenues for the past two years follow Corporate Revenue Corporate Overhead costs Most recent year $121,750,000 56,087,500 Previous year 77.700,000 5,10,50 Roy 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 ant Cat Production Costs 1 222,000 13,364,340 2 224,700 1.185,00 222,400 1,194,493 243.000 1,210,035 250, 450 1,212,3 1:233,10 227,750 1.200,211 254,700 1,251,256 246,00 1.249,735 le 260,150 1,261,637 21 257,700 1,256,272 12 266,700 1,296,963 3 4 5 Required: a. Bunk Stores has requested a quote for a special order of Bubbs. This order would not be subject to any corporate allocation and would not affect corporate costs) What is the minimum price Mt Andre can offer Bunk without reducing profit any further b. How many cases of Bubbs does Luke have to sell in order to break even on the product? c. Suppose Luke has a requirement that all products have to eam 5 percent of sales after tax and corporate allocations or they will be dropped. How many cases of Bubbs does Me Andre need to sell to avoid seeing Bubbs dropped? d. Assume all costs and prices will be the same in the next year. If Luke drops Bubbs, how much will Luke's profits increase or decrease? Assume that fored production costs can be avoided if Bubbs is dropped Complete this question by entering your answers in the tabs below. Required A Required Required C Required Assume all costs and prices will be the same in the next year. If Luke drops Bubbs, how much will Luke's profits increase or decrease? Assume that fixed production costs can be avoided if Bubbs is dropped. (Use variable cost percentage to 2 dedmal place. Round intermediate calculations and final answer to nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles

Authors: John Wild, Ken Shaw, Barbara Chiappett

23rd edition

978-1259536359

Students also viewed these Accounting questions

Question

what is a non - relational database?

Answered: 1 week ago