E7-8 Analyzing Keep-or-Drop Decision 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. 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 ToddieTown Tours collection follows: MSI has determined that elimination of the 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. Will MSI's net operating income increase or decrease if the POP product is eliminated? By how much? 2. Should MSI drop the POP product? 3. Suppose $3,700 of the common Exed costs could be avoided if the POP product line were elimtinated. Would your recommentiation s N Si change? Why or why not