Morning SkyInc. ), 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 controlsTo date MSI has developed and manufactured all the 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 childrenMSI 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 ToddleTown Tours collection. This collection is aimed at children one to three years of age and includes tours of a hypothetical townTwo productsThe Pet Store Parade and The Grocery Getawayhave impressive salesHowever , 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

Sepetu The State For HSS Toddler Tours Pro Lines Sales reven Varlate costs Contribution margin Less Direct Fixed costs Segment margin Less Common Fixed costs Net operating Income (Toss) Pet Store Parade $140,000 59,000 $81,000 3.400 $ 72,600 2,000 $ 65,600 Grocery utady $135,000 55,000 $ 30,000 3,50 $ 71,500 6,250 5.64250 Post Office Polka Totat 537,90 $312,000 33.ae 147,600 $ 4,000 $165,000 3,500 20,400 5 500 $144,00 1,85e 15,660 $150) $120,000 "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 2. Should MSI drop the POP product? 3.6. Calculate the incremental effect on profit if the POP product is eliminated Suppose that $1.200 of the common fixed costs could be avoided if the POP product line were eliminated 3-b. Should MSI drop the POP product? 00 8 464 Required information The following information applies to the questions displayed below Morning Sky, Inc. (MS), manufactures and sells computer games. The company has several product lines based on the nge range of the target market MSI sellis 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 ats door Hint rence MSI's educational products are currently sold without any supplemental materials. The company is considering the inclusion of Instructional materials such as an overhead slide presentation, potential test questions and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: co with Instructional CD Only Materists Estimated demand 27,000 units 27,000 units Estimated sales price $-23.00 5 38.00 Estimated cost per unit Direct materials $ 2.75 5 3.25 Direct labor 4.80 7.00 Variable manufacturing overhead 4.00 7.25 Fixed manufacturing overhead 3.50 Unit onufacturing cost 5.14.25 $ 21.00 00 8 1. Based on the given data, compute the increase or decrease in profit that would result of instructional materials were added to the CDs 2. Should MSI add the instructional materials or sell the CDs without them? 3. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units Complete the Table given below based on Requirement 1 and 2 data 3-b. Should MSI add the instructional materials or sell the CDs without them? 1 Complete this question by entering your answers in the tabs telow. De Re2 RA Reg 36 won Based on the oven data, compute the increase or decrease in profit that would result of instructional materials were added to the CDs Co Oy CI) with such Mati increme Sales Revenue Variable Costi Contribution Margin Additional Development Costs Diferential Profile (Los) Reg 2 > CHECH ned on the given ideia, compute the increase or decrease in profit that would result of instructional materials were added to the 2. Should Siode the instructional materials or the CDs without them? Suppose that the higher price of the Cos with intructional materials is expected to reduce demand to 20.000 um Complete the sabe given below based on Requirement and 2 data 3. Should MStade the instructional materials or sell the CDs without then Canplote this question by entering your answers in the tabs below. Rupnou that the higher price of the cos with instructional materiali is expected to reduce demand to 20,000 units. Complete the table given below based on Requirement 1 and 2 data Ch Only OD won intructional incremental Sales Revenue Vanabile Costs Contributor Margin Additional Development Costs Differential Pront Los