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I need help on question 1 and 3 A E 7 - 8 ( Algo ) Analyzing Keep - or - Drop Decision [ LO
I need help on question and A
EAlgo Analyzing KeeporDrop Decision LO
MSI is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one to three years
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:
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.
Requlred:
Calculate the incremental effect on profit if the POP product is eliminated.
Should MSI drop the POP product?
a Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $ of the common fixed costs could
be avoided if the POP product line were eliminated.
b Should MSI drop the POP product?
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Calculate the incremental effect on profit if the POP product is eliminated.
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