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 Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, Post Office Polka (POP), 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: Sales revenue Variable costs Contribution margin Less: Direct Fixed costs Segment margin Less: Common fixed costs* Net operating income (loss) Segmented Income Statement for MSI's Toddle Town Tours Product Lines Pet Store Parade $ 135,000 57,000 $ 78,000 8,200 $ 69,800 6,750 Grocery Getaway $ 130,000 53,000 $ 77,000 8,200 $ 68,800 6,500 $ 63,050 $ 62,300 Post Office Polka $ 36,000 32,000 $ 4,000 3,400 $ 600 1,800 $ (-1,200) Total $ 301,000 142,000 $ 159,000 19,800 $ 139,200 15,050 $ 124,150 *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 $1,200 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product?