Answered step by step
Verified Expert Solution
Question
1 Approved Answer
first answer is incorrect, please ignore that MSI is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one
first answer is incorrect, please ignore that
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 MSI's Toddle Town Tours Product Lines Pet Store Parade Grocery Post Office Getaway Polka Total $115,000 110,000 32,000 S257,000 28,000 122.000 $66,000 $ 65,000 4,000 $135,000 3,000 17,400 $58,600 58,000$1,000 $117,600 1,600 12,850 52850 52,500 (600S104.750 Sales revenue Variable costs Contribution margin Sege margin Net operating income (loss) 49,000 7.400 5,750 45,000 7,000 5,500 Less: Direct Fixed costs Less: Cormmon fixed cosls Allocated based on total sales dollars 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 Effect on Profit S52.032 DecreaseStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started