ab 7 Saved Morning Sky, Inc. (MS), 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 MSI is considering eliminating a product from its Toddle Town 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 MST's information related to the ToddleTown Tours collection follows: Segmented Income Statement for HI's Toddletown Tours Product (Ines Sales revenue Variable casts Contribution margin Less: Grest Fixed costs Segment orgle Pet Store Parede Grocery Post office Getaway totel $105,000 $100,000 $30,000 $235,000 45,000 $60,000 41,000 339,000 $52,000 25,000 111,000 $3,000 $124,000 18,209 5200 $100,000 3,250 Less: Common fixed costs set operating income (less) Allocated based on totel sales revenue 147-750 147 600 14,000) 34 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 of the POP product is eliminated 2. Should MSI drop the POP product 3. Calculate the incremental effect on prode of the POP product is eseted Suppose that $1000 of the common fixed costs could be avoided of the POP product ine were elesinated 3-6 Shodd MS doo the POP product