Luke Corp. calculates its product margins including a share of corporate costs. One product, Bubbs, currently sells for $8.50 per case. In the most recent year 2.36 million cases were sold. Under the current allocation method, corporate costs ($10.5 million in the current budget) are assigned to products at a rate of 10% of revenues. Assume your estimates of the corporate costs suggest that corporate costs have a variable component equal to 5% of revenues and an annual fixed component of $4,800,000.

What would be your estimate of the corporate costs that should be allocated to Bubbs using this alternative approach? You should assume that 12% of corporate fixed costs are allocated to Bubbs