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Roy O. Andre, the product manager for Bubbs, is concemed obout whether the product wil 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: Required: a. Bunk Stares has requested a quate for a special ordes of Bubbs. Thes order would not be subject to any corporate allocation (anid) would not affect corporate costs). What is the mimum price Mr. Andre can offer Bunk without reducing profit any further? b. How many cases of \&ubbs does Luke have to seil in order to break even on the product? c. Suppose Luke has a requirement that al products have to earn 5 percent of sales fafter tax and corporate allocations) or they will be diopped. How many cases of Bubbs does Mt. Andre need to sell to avold seeing Bubbs dropped? d. Assume all costs and prices will be the same in the nextyeat if tuke drops Bubbs, how much wit tuke 's profits increase of deciease? Assume that fived production costs can be avoided if Bubbs is aropped 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 theil own division tast year, the managers at Luke developed and began marketing a new chewng gum, Bubbs, to sel in vendind machines. The product, which sells for $5.80 per case, has not had the market success that managers expected and the company is considenng dropping Bubbs The productine income statement for the past 12 months follows? Al products at tuke recerve an alocaboci of corporate overthead costs. Which is computed as 5 percent of product revenue. The 5 percent rate is computed based on the most tecentyear's corporate cost as a percentage of revenue. Data on corporate costs and tevenues for the past two years follow. Roy O Andre, the product manager fo Bubbs, is concened about whether the product will be dropped by the compary and thas employed you as a fitancial consullant to helo with some analysis In addition to the information given, Mr Andre provides you with the following data on product costs for Bubbs: Roy O. Andre, the product manager for Bubbs, is concemed obout whether the product wil 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: Required: a. Bunk Stares has requested a quate for a special ordes of Bubbs. Thes order would not be subject to any corporate allocation (anid) would not affect corporate costs). What is the mimum price Mr. Andre can offer Bunk without reducing profit any further? b. How many cases of \&ubbs does Luke have to seil in order to break even on the product? c. Suppose Luke has a requirement that al products have to earn 5 percent of sales fafter tax and corporate allocations) or they will be diopped. How many cases of Bubbs does Mt. Andre need to sell to avold seeing Bubbs dropped? d. Assume all costs and prices will be the same in the nextyeat if tuke drops Bubbs, how much wit tuke 's profits increase of deciease? Assume that fived production costs can be avoided if Bubbs is aropped 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 theil own division tast year, the managers at Luke developed and began marketing a new chewng gum, Bubbs, to sel in vendind machines. The product, which sells for $5.80 per case, has not had the market success that managers expected and the company is considenng dropping Bubbs The productine income statement for the past 12 months follows? Al products at tuke recerve an alocaboci of corporate overthead costs. Which is computed as 5 percent of product revenue. The 5 percent rate is computed based on the most tecentyear's corporate cost as a percentage of revenue. Data on corporate costs and tevenues for the past two years follow. Roy O Andre, the product manager fo Bubbs, is concened about whether the product will be dropped by the compary and thas employed you as a fitancial consullant to helo with some analysis In addition to the information given, Mr Andre provides you with the following data on product costs for Bubbs

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