MSI is considering eliminating a product from its loddlelown lours 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 ToddleTown Tours Product Lines Pet Post Store Grocery Office Parade Getaway Polka Total Sales revenue $70,000 $65,000 $23,000 $158,000 Variable costs 31,000 27,000 18,000 76,000 Contribution margin $39,000 $38,000 $ 5,000 $ 82,000 Less: Direct Fixed costs 5,600 4,300 4,500 14,400 Segment margin $33,400 $33,700 $ 500 $ 67,600 Less: Common fixed costs* 7,000 6,500 2,300 15,800 Net operating income (Loss) $26,400 $27,200 $(1,800) $ 51,800 *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-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $2,000 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product? Req 1 Req 2 Req Req 3B Calculate the incremental effect on profit if the POP product is eliminated. Effect on Profit Req 1 Req 2 Req Req 3B Should MSI drop the POP product? Should MSI drop the POP product? Req 1 Reg 2 Req Req 3B Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $2,000 of the common fixed costs could be avoided if the POP product line were eliminated. Effect on Profit Req 1 Reg 2 Req Req 3B Should MSI drop the POP product? Should MSI drop the POP product