a) | ||||||||||
SUMMARY OUTPUT | ||||||||||
Regression Statistics | ||||||||||
Multiple R | 0.91400386 | |||||||||
R Square | 0.835403056 | |||||||||
Adjusted R Square | 0.818943362 | |||||||||
Standard Error | 16389.42803 | |||||||||
Observations | 12 | |||||||||
ANOVA | ||||||||||
df | SS | MS | F | Significance F | ||||||
Regression | 1 | 1.36E+10 | 1.36E+10 | 50.75446939 | 3.2E-05 | |||||
Residual | 10 | 2.69E+09 | 2.69E+08 | |||||||
Total | 11 | 1.63E+10 | ||||||||
Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | Lower 95.0% | Upper 95.0% | |||
Intercept | 687301.3722 | 76026.13 | 9.04033 | 3.97492E-06 | 517904.6 | 856698.2 | 517904.6 | 856698.2 | ||
X Variable 1 | 2.215592511 | 0.310995 | 7.124217 | 3.20155E-05 | 1.522654 | 2.908531 | 1.522654 | 2.908531 | ||
The minimum price Mr. Andre can offer Bunk without reducing profit any further is equal to variable cost per unit | $ 2.22 | |||||||||
b) | ||||||||||
High-low method: | ||||||||||
Variable cost estimate = (Cost at highest activity – Cost at lowest activity)/(Highest activity – Lowest activity) | ||||||||||
Corporate Revenue | Corporate Overhead Costs | |||||||||
Most recent year | 121,750,000 | 6,087,500 | ||||||||
Previous year | 77,700,000 | 5,109,590 | ||||||||
Difference | 44,050,000 | 977,910 | ||||||||
Variable cost corporate estimate = 977,910/$44,050,000 | 2.22% | of revenue | ||||||||
Let Q be number of cases sold | ||||||||||
Profit = Revenues - Variable Product Cost - Variable Corporate costs - Fixed Production Costs | ||||||||||
Profit = $6 x Q - $2.22 x Q - ($6 Q x 2.22%) - $687301.37 | ||||||||||
Break Even Point (Q) = $687301.37/ $3.65 | $ 188,239.47 | cases | ||||||||
c) | ||||||||||
Profit = $6 x Q - $2.22 x Q - ($6 Q x 5%) - $687301.37 | ||||||||||
Break Even Point (Q) = $687301.37/ $3.48 | 120,579.19 | cases | ||||||||
d) | ||||||||||
Lost Revenue | -14,704,650 | |||||||||
Product Cost Avoided | 14,447,895 | |||||||||
Loss Before corporate overhead savings | -256,755 | |||||||||
Allocated corporate costs (2.22% x 14704650) | 326,443 | |||||||||
Increase profits before Tax | 69,688 | |||||||||
Allowance for tax (@20%) | 13,938 | |||||||||
Increased Profits | 55,751 |
Luke Corporation produces a variety of products, each within their own division. Last year, the managers...
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 $5.70 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 past 12 months follows: Revenue $ 14,695,650 Costs Manufacturing costs $ 14,444,895 Allocated corporate costs (@5%) 734,783 15,179,678...
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 $5.40 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 past 12 months follows: Revenue $ 14,686,650 Costs Manufacturing costs $ 14,441,895 Allocated corporate costs (@5%) 734,333 15,176,228...
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 $5.75 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 past 12 months follows: Revenue $ 14,697,150 Costs Manufacturing costs $ 14,445,395 Allocated corporate costs (@5%) 734,858 15,180,253...
Show all work please. Thank you! 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 $5.30 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 past 12 months follows: $ 14,683,650 Revenue Costs Manufacturing costs Allocated corporate...
7 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 $565 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 past 12 months follows: ped $ 14,694,150 Revenue Costs Manufacturing costs Allocated corporate costs (@5%) Product-line...
Integrative Case 5-72. Cost Estimation, CVP Analysis, and Decision Making (@LO 54, 5,9) 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 $5.25 per case, has not had the market sliccess that managers expected, and the company is considering dropping Bubbs. The product-line income statement for the past 12 months follows. $14.682.150...
TB MC Qu. 5-50 The Missou Manufacturing Company recorded overhead... The Missou Manufacturing Company recorded overhead costs of $14,262 at an activity level of 4,600 machine hours and $8,157 at 2,380 machine hours. The records also indicated that overhead of $9,770 was incurred at 2,680 machine hours. What is the total estimated cost for 2,680 machine hours using the high-low method to estimate the cost equation? O $8,157. $9,770. $8,982. O O $7,370. References Multiple Choice Difficulty: 2 Medium Integrative...
i posted this problem once before but nobody could answer it, so im gonna try again. can anyone explain how many cases luke has to sell in a month in order to break even on the product? Luke Corporation produces a variety of products, cach 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 $5.15 per case, has not had...
Accounting 311 In class #1 Based on Case 5-64 in text 5-64. Cost Estimation, CVP Analysis, and Decision Making (LO 5-4.5.8) 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 $5.25 per case, has not had the market success that managers expected and the company is considering dropping Bubbs. The product-line income...
Accounting 311 In class #1 Based on Case 5-64 in text 5-64. Cost Estimation, CVP Analysis, and Decision Making (LO 5-4, 5, 8) 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 $5.25 per case, has not had the market success that managers expected and the company is considering dropping Bubbs. The...