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:

$\backslash$table$[[\backslash$table$[[$Segmented Income Statement for MSI's$],[$ToddleTown$],[$Tours Product Lines$]]],[,$Pet Store,Grocery,Post office,$],[$Pales revenue,Parade,Getaway,Polka,$],[$Variable costs,$$75,000,$$$70,000,$$$24,000,],[$Contribution margin,$33,000,29,000,19,000,],[$Less: Direct Fixed costs,$$42,000,$$$41,000,5,000,],[$Segment margin,$5,800,4,600,4,600,],[$Less: Common fixed costs$*,$$$36,200,$$$36,400,$$$400,],[$Net operating income $($loss$),7,500,7,000,2,400,]]$

$*$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:

Calculate the incremental effect on profit if the POP product is eliminated.

Should MSI drop the POP product?

$3-$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?