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 $5.50 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 last month follows: Revenue $ 1,415,975 Costs $ Production costs (1,285,451) Product-line margin 130,524 Allowance for tax (@20%) (26,104.80) Product-line profit (loss) $ 104,419.20 I 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 production costs for Bubbs for the past 12 months: Month Cases Production Costs 1 220,000 $1,155,250 2 219,200 1,174,265 3 216,900 1,172,918 4 233,000 1,193,523 5 238,100 1,195,827 6 241,000 1,216,673 7 222,200 1,195,699 340.000 tigate 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 production costs for Bubbs for the past 12 months: Month Cases Production Costs 1 220,000 $1,155,250 2 219,200 1,174,265 3 216,900 1,172,918 4 233,000 1,193,523 5 238,100 1,195,827 6 241,000 1,216,673 7 222,200 1,195,699 8 249,200 1,215,210 9 242,800 1,233,226 10 254,600 1,250,377 11 249,500 1,249,760 12 256,300 1,285,451 Assume that the relevant range of production is between 150,000 and 350,000 cases. Required: Respond to the following questions. 1. How many cases of Bubbs does Luke have to sell in a single month in order to break even on the product? Use Regression in Excel to find the fixed and variable portions of the production costs. o Cases will be the X variable and Production Costs will be the Y variable. o Produce a line-fit plot with the regression output and with axis correctly labeled. o Submit your regression output in an Excel file as part of the assignment. Round the variable cost per unit and total fixed cost you find in the regression to two decimal places to answer questions 1 and 3. Round your answer (breakeven number of cases) up to the next nearest whole number. Use this rounded number to answer question 2 2. What is Bubbs' current margin of safety percentage based on the most recent product-line income statement? (round your answer to two decimal points, i.e., XX.XX%) 3. Suppose Luke has a requirement that all products must earn an after-tax profit equal to 7 percent of total sales per month or they will be dropped. How many cases of Bubbs does Mr. Andre need to sell in a month to avoid seeing Bubbs dropped? (round the number of cases to the nearest whole number) Use Solver in Excel to answer this problem 125 Regression Statistic Me 0.0095 Sque 02718 Adented 03095 Standard 165316 32 17/02 c D 0 " 10 ANOVA 11 MS F 12 1 L-10 1-10 478648 4.11-05 13 Wal 10 2.7E+09 27-08 14 Tatal 11 16-10 16 Coefficientiandard Stat Power perwer Upper 644442 821043 784506 1.405 461502 827381 461502 82787 18 Cases 2.39372 0.34599 691844 415-05 162281 116464 167281 3.16464189 19 20 21 22 RENNIAL OUTPUT 23 24 serveland Product Residuals 1169146 15 5119 3 1163640 9277.56 4 1202179 11171061 2 21 29 51214387 30 31 56.39 185604 61221329 4656 18 7 1126327 193718 8 1240968 35747.7 91225638 7588.11 to 1253884 350683 11 1241676 804.16 54 35 36 12 125953 27497 27 Sheet Q1 02 03 + 5000 $3000 L 20000 M Cases Line Fit Plot $5.50 Co 53.11 Fixed costs Variable Cost 644441726 2.39122349 Breakeven Sales D