E7-8 (Algo) Analyzing Keep-or-Drop Decision [LO 7-2, 7-5] 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 Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, Post Office Polka (POP), 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: Sales revenue Variable costs Contribution margin Less: Direct Fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Segmented Income Statement for MSI's ToddleTown Tours Product Lines Pet Store Parade $ 120,000 51,000 $ 69,000 7,600 $ 61,400 6,000 Grocery Getaway $ 115,000 47,000 $ 68,000 * 7,300 $ 60,700 5,750 $ 55,400 $ 54,950 Post Office Polka $ 33,000 29,000 $ 4,000 3,100 $ 900 1,650 $ (-750) Total $ 268,000 127,000 $141,000 18,000 $ 123,000 13,400 $ 109,600 "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.