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. MSIs information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSIs ToddleTown Tours Product Lines Pet Store Parade Grocery Getaway Post Office Polka Total Sales revenue $ 90,000 $ 85,000 $ 27,000 $ 202,000 Variable costs 39,000 35,000 22,000 96,000 Contribution margin $ 51,000 $ 50,000 $ 5,000 $ 106,000 Less: Direct Fixed costs 6,400 5,500 4,500 16,400 Segment margin $ 44,600 $ 44,500 $ 500 $ 89,600 Less: Common fixed costs* 9,000 8,500 2,700 20,200 Net operating income (loss) $ 35,600 $ 36,000 $ (2,200 ) $ 69,400 *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. Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. 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. 3-b. Should MSI drop the POP product? Yes No