MSI is considering eliminating a product from its ToddeTown 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 Toddle Town Tours collection follows Segmented Income Statement for MSIr's Toddie Town Tours Product Lines Pos Pet Store Grocery Office Total Parade Getaway Polka $90,000 $85,000 $27,000 $202,000 Sales revenue Variable costa $5%,000 560,000 35,000 5108.00 $51.000 $50,000 5.000 $106.000 Contibution margin Segment margin Net operatng income (loss) Less: Direct Fixed costs 800 9,000 Less: Common fixed costs B,500 2,700 20,200 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. 1. Calculate the incremental effect on profit if the POP product is eiminated. Elect on Prof 2. Should MSI drop the POP product? Yes No 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. Efect on Profit