3 Part 3 of 4 Required information [The following information applies to the questions displayed below. Morning Sky, Inc. (MSI), manufactures and sells computer games. The company has several product lines based on the age range of the target market. MSI sells both individual games as well as packaged sets. All games are in CD format, and some utilize accessories such as steering wheels, electronic tablets, and hand controls. To date, MSI has developed and manufactured all the CDs itself as well as the accessories and packaging for all of its products. The gaming market has traditionally been targeted at teenagers and young adults; however, the increasing affordability of computers and the incorporation of computer activities into Junior high and elementary school curriculums has led to a significant increase in sales to younger children. MSi has always included games for younger children but now wants to expand its business to capitalize on changes in the industry. The company currently has excess capacity and is Investigating several possible ways to improve profitability 2 points Book Hunt P References MSI is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one to three years of age and includes tours' of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production MSI's information related to the ToddleTown Tours collection follows: Segmented Income Statement for MST Todalom Tours Product Tanes Pet Store Grocery Para Getaway Sale zeven $90.000 $85.000 Variable COEL 39,000 35.000 Contribution margin 551,000 550.000 Ast Dick Fix costs 6.400 5,500 Segment margin 544.600 144,500 Lon Common fixed cost 3.000 00 Not rating incon (1) $10,000 Post DEEL Polka Total $27.000 $ 202,000 22.000 96.000 $5,000 $106.000 4.500 16,400 5 500 $ 59,600 2.700 20,200 SE2000400 ARE TATO 3 Required information Part 3 of 4 2 points *Allocated based on total sales revenue. MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product would be redistributed to the remaining two products. Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. 2. Should MSI drop the POP product? 3-4. Calculate the incremental effect on profit if the POP product's eliminated. Suppose that $2.000 of the common fixed costs could be avoided it the POP product line were eliminated 3.6. Should MSI drop the POP product? Prv Complete this question by entering your answers in the tabs below. Reg1 Beg 3 0 30 Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $2,000 or the common fixed costs could be avoided if the POP product line were eliminated $ 1,900 Check AVAARA RARA 1 of 4 Required information remaining fixed overhead currently allocated to the POP product would be redistributed to the remaining two products, Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. 2. Should MSI drop the POP product? 3-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $2,000 of the common fixed costs could be avoided the POP product line were eliminated 3-6. Should MSI drop the POP product? Vs Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Ben A Calculate the increment effect on profit if the POP product is liminated 1.100 Reg 2 Required information Required: 1.Calculate the incremental effect on profit if the POP product is eliminated. 2. Should MSI drop the POP product? 3-a. Calculate the incremental effect on profile of the POP product is eliminated Suppose that $2,000 of the common fixed costs could be avoided the POP product line were eliminated 3-b. Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Re 1 Red 2 ReQ 3A Reg Delen Cuculate the incremental treat on prontthe pop product is eliminated Suppose that $2,000 of the common twad con could be avoided if the POP product in were eliminated $ 1.6increase