Luke Corporation produces a variety of producls, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubas, to sell in vending machines. The product, which sels for $5.40 per case, has not had the iratket success that managers expected and the company is considering dropping Bubbs. The produch-line income slalement for the past 12 months follows: $ 14,695,050 5 Revenue Costa Manufacturing als Allocated corporate cusis (25%) Productine margin Allowance for tax 620N) Product in prott oss 14,441,896 734,333 3 15.178.220 (489,578) 97,915 (391,663) 5 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: Meal can YRA Previous year Corporate Revenue Corporate Overhead Coats s 109,750 CCO 5 5 487 500 S 78,500,CCO 4.729400 Roy O. Andre, the product manager for Bubbe, is concerned about whether the product will be cropped 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 following cate on product costs for Bubbe: Month Cases Producion Costs 210,000 $1,146,328 2 28,700 1,167,828 2-16.400 1,176 481 4 291,000 1,192 023 234,900 1,194,327 240,000 1,210.173 7 221,700 1,150.199 248 700 8 240,300 1.281.728 10 254,100 1,243.828 11 251,700 1,243,200 12 260,700 1,278.551 3 5 a 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 Mr. Andre can offer Bunk without reducing profit any further? (Round your answer to 2 decimal places.(i.e., 32.21)) Minimum Price per case b. How many cases of Bubbs does Luke have to sell in order to break even on the product? (Round variable cost percentage to 2 decimal places, fixed costs to whole dollar amount and profit per case to 3 decimal places for intermediate calculations. Round your final answer up to the nearest whole unit.) Number of cases c. Suppose Luke has a requirement that all products have to earn 5 percent of sales (before tax after corporate allocations) or they will be dropped. How many cases of Bubbs does Mr. Andre need to sell to avoid seeing Bubbs dropped? (Round your minimum price per case to 2 decimal places and do not round your other intermediate calculations. Round your final answer up to the nearest whole unit.) Number of cases 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 fixed production costs can be avoided if Bubbs is dropped. (Use variable cost percentage to 2 decimal places. Round intermediate calculations and final answers to nearest whole dollar amount.) Profits Luke Corporation produces a variety of producls, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubas, to sell in vending machines. The product, which sels for $5.40 per case, has not had the iratket success that managers expected and the company is considering dropping Bubbs. The produch-line income slalement for the past 12 months follows: $ 14,695,050 5 Revenue Costa Manufacturing als Allocated corporate cusis (25%) Productine margin Allowance for tax 620N) Product in prott oss 14,441,896 734,333 3 15.178.220 (489,578) 97,915 (391,663) 5 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: Meal can YRA Previous year Corporate Revenue Corporate Overhead Coats s 109,750 CCO 5 5 487 500 S 78,500,CCO 4.729400 Roy O. Andre, the product manager for Bubbe, is concerned about whether the product will be cropped 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 following cate on product costs for Bubbe: Month Cases Producion Costs 210,000 $1,146,328 2 28,700 1,167,828 2-16.400 1,176 481 4 291,000 1,192 023 234,900 1,194,327 240,000 1,210.173 7 221,700 1,150.199 248 700 8 240,300 1.281.728 10 254,100 1,243.828 11 251,700 1,243,200 12 260,700 1,278.551 3 5 a 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 Mr. Andre can offer Bunk without reducing profit any further? (Round your answer to 2 decimal places.(i.e., 32.21)) Minimum Price per case b. How many cases of Bubbs does Luke have to sell in order to break even on the product? (Round variable cost percentage to 2 decimal places, fixed costs to whole dollar amount and profit per case to 3 decimal places for intermediate calculations. Round your final answer up to the nearest whole unit.) Number of cases c. Suppose Luke has a requirement that all products have to earn 5 percent of sales (before tax after corporate allocations) or they will be dropped. How many cases of Bubbs does Mr. Andre need to sell to avoid seeing Bubbs dropped? (Round your minimum price per case to 2 decimal places and do not round your other intermediate calculations. Round your final answer up to the nearest whole unit.) Number of cases 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 fixed production costs can be avoided if Bubbs is dropped. (Use variable cost percentage to 2 decimal places. Round intermediate calculations and final answers to nearest whole dollar amount.) Profits