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.

6. 1000 points Requud information MS is considering eliminating a product from its Toddle Town Tours collection. This collection is aimed at children one to three years of age and includes noun of a hypothetica 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 HTM MSi's Information related to the Todd Town Tours collection follows: Segmented Income Statement for MSI'S Taddle Town Tours Product Lines Post Pet Store Grocery Office Parade GBY Pod Total Sales revenue 550.000 $215.000 $15,000 $150000 Variable costs 23.000 10.000 52.000 Contribution margin $27.000 $26.000 55,000 $ 68,000 Less Direct Fixed costs 4.800 3100 3.500 11400 Segment margin $22.200 $22.900 5 1,500 $ 46,600 Eess Common for costs" 14.400 1200 4,320 31680 Net operating income oss 327800 319940 3122020) 19000 "Allocated based on total sales revenue. MSI has determined that almination of the Post Office Polka (POP) program would not impact sales of the other two toms. The remaining fixed overhead currently located 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 limited MacBook AS So DAN 8 CLUB 2. Should MSI drop the POP product? Yes O No 3-3. Calculate the incremental effect on profit of the POP product is eliminated Suppose that $3,700 of the common fixed costs could be avoided if the POP product ine were eliminated Etico Pro 3-5. Should drop the POP product? Yes O NO References eBook & Resources Hint MacBook Air 13 ::8 ESC