Integrative Case 5-72 (Algo) Cost Estimation, CVP Analysis, and Decision Making (LO 5-4, 5, 9) 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 $6.20 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 Costs Manufacturing costs Allocated corporate conta (85%) Product-line margin Allowance for tax (20%) Product-line profit (loss) $ 14,710,650 $ 14,449.895 735,533 $ 15,185,428 (474,778) 94,955 $ (379,823) 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 percentage of revenue. Data on corporate costs and revenues for the past two years follow: Most recent year Previous year Corporate Revenue Corporate Overhead Costa 5 125,750,000 78,100,000 $ 6,287,500 5,301,145