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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

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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 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 $110,000 $105,000 $31,000 $246,000 Variable costs 47,000 43,000 28,000 118,000 Contribution $ 63,000 $ 62,000 $ 3,000 $128,000 margin Less: Direct 7,200 6,700 2,800 Fixed costs 16,700 Segment margin $ 55,800 $ 55,300 $ 200 $111,300 Less: Common 5,500 5,250 1,550 12,300 fixed costs Net operating $ 50,300 $ 50,050 $(1,350) $ 99,000 income (loss) "Allocated based on total sales revenue. *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 $1,000 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3A Reg 3B Calculate the incremental effect on profit if the POP product is eliminated. Effect on Profit ROQ Req 2 > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Req 3B Should MSI drop the POP product? Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Req1 Reg 2 Req 3A Req 3B Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1,000 of the common fixed costs could be avoided if the POP product line were eliminated. Effect on Profit Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Feq 3B Should MSI drop the POP product? Should MSI drop the POP product?

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