MSI is considering ellminating 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, soles for the third CD in the collection, The Post Office Polka, have tagged 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: Segnented Income statement for MSI's ToddleTown Tours Product Lines Post Pet Store Grocery Office Parade Getaway Polka Total Sales revenue $50,000 $ 45,000 $ 15,000 $110,000 Variable costs 23,000 19.000 10,000 52.000 Contribution margin $ 27,000 $ 26,000 $ 5,000 $ 58,000 Lesst Direct Fixed costs 4.800 3,100 3,500 11,400 Segment margin $ 22,200 $ 22,900 $ 1,500 546,600 Less Common fixed costs 14,400 12960 4,320 31.680 Net operating income $ 7.800 $ 9.940 (loss) S (2,820) $ 14,920 "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 $3,700 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 Reg 3A Reg 38 Calculate the incremental effect on profit if the POP product is eliminated 2,200 Increase Effect on Profit Req Reg 2 > 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 $3,700 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 38 Reg 1 Reg 2 Req Should MSI drop the POP product? Should MSI drop the POP product? 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 $3,700 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. Req Reg 1 Rea 2 Req 38 Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $3,700 of the common fixed costs could be avoided if the POP product line were eliminated. Effect on Profit 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 $3,700 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 Reg 30 Should MSI drop the POP product? Should MSI drop the POP product? ( Req 3A Rogue
