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: Segmented Income Statement for MSI's ToddleTown Tours Product Lines Pet Store Parade Grocery Getaway Post Office Polka Total Sales revenue $ 130,000 $ 125,000 $ 35,000 $ 290,000 Variable costs 55,000 51,000 31,000 137,000 Contribution margin $ 75,000 $ 74,000 $ 4,000 $ 153,000 Less: Direct Fixed costs 8,000 7,900 3,300 19,200 Segment margin $ 67,000 $ 66,100 $ 700 $ 133,800 Less: Common fixed costs* 6,500 6,250 1,750 14,500 Net operating income (loss) $ 60,500 $ 59,850 $ (-1,050) $ 119,300 *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

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\" ofa 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. MSl's information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI's ToddleTown Tours Product Lines Pet Store Grocery Post Office Parade Getaway Polka Total Sales revenue $ 130,000 $ 125,000 $ 35,000 $ 290,000 Variable costs 55,000 51,000 31,000 137,000 Contribution margin $ 75,000 $ 74,000 $ 4,000 $ 153,000 Less: Direct Fixed costs 8,000 7,900 3,300 19,200 Segment margin $ 67,000 $ 66,100 $ 700 $ 133,800 Less: Common fixed costs* 6,500 6,250 1,750 14,500 Net operating income (loss) $ 60,500 $ 59,850 $ (1,050) $ 119,300 *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 ifthe 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