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MSI's information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI'S ToddleTown Tours Product Lines Post Pet Store Grocery Office Parade Getaway
MSI's information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI'S ToddleTown Tours Product Lines Post Pet Store Grocery Office Parade Getaway Polka Total Sales revenue $140,000 $135,000 $37,000 $312,000 Variable costs 59,000 55,000 33,000 147,000 Contribution margin $ 81,000 $ 80,000 $ 4,000 $165,000 Less: Direct Fixed costs 8,400 8,500 3,500 20,400 Segment margin $ 72,600 $ 71,500 S 500 $144,600 Less: Common fixed costs* 7,000 6,750 1,850 15,600 Net operating income (1033) $ 65, 600 $ 64,750 $(1,350) $129,000 *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? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Reg 3B Calculate the incremental effect on profit if the POP product is eliminated. Effect on Profit Req 1 Reg 2 Req Req 3B 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. Effect on Profit
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