Luke Corporation produces a variety of products, each within their own division. Las year, the managers at Luke developed and began marketing a new chewing gum Bubbs, to sell in vending machines. The product, which sells for $5.90 per case, ha not had the market success that managers expected and the company is considerin dropping Bubbs. The product-line income statement for the past 12 months follows: $ 14,701,650 Revenue Costs Manufacturing costs Allocated corporate costs (@5%) Product-line margin Allowance for tax (@20%) Product-line profit (loss) $ 14,446,895 735,083 15, 181,978 $ (480,328) 96,065 $ (384,263) 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: Most recent year Previous year Corporate Revenue Corporate Overhead Costs $ 119,750,000 $ 5,987,500 77,500,000 5,024,200 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 product costs for Bubbs: Month Cases Production Costs 220,000 $1,161, 340 223,700 1,182,840 221,400 1,191, 493 4 241,000 1,207,035 244,950 1,209, 339 6 250,000 1,230,185 226,750 1,205,211 8 253,700 1,248, 286 245,300 1,246,738 259, 150 1,258,837 11 256,700 1,263, 272 12 265,700 1,293,963 1 2 3 9 10 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? 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 earn 5 percent of sales (after tax and corporate allocations) or they will be dropped. How many cases of Bubbs does Mr. 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 fixed production costs can be avoided if Bubbs is dropped. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Bunk Stores has requested a quote for a special order of Bubbs. This order would not be ! (and would not affect corporate costs). What is the minimum price Mr. Andre can offer Bu further? (Round your answer to 2 decimal places.(i.e., 32.21)) Minimum price per case Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How many cases of Bubbs does Luke have to sell in order to break even on the product? decimal places, fixed costs to whole dollar amount and profit per case to 3 decimal places your final answer up to the nearest whole unit.) Number of cases Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Suppose Luke has a requirement that all products have to earn 5 percent of sales (after t will be dropped. How many cases of Bubbs does Mr. Andre need to sell to avoid seeing Bu price per case to 2 decimal places and do not round your other intermediate calculations. nearest whole unit.) Number of cases Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Assume all costs and prices will be the same in the next year. If Luke drops Bubbs, hown decrease? Assume that fixed production costs can be avoided if Bubbs is dropped. (Use vi places. Round intermediate calculations and final answer to nearest whole dollar amount. Profits