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Required information 3 Part 3 of 3 MSI's information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI'S ToddleTown Tours Product Lines
Required information 3 Part 3 of 3 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 Tolka Total Sales revenue $135,000 $130,000 $36,000 $301,000 Variable costs 57,000 53,000 32,000 142,000 Contribution margin $70,000 $ 77,000 $4,000 $159,000 Less Direct Fixed costs 8,200 8,200 3,400 19,800 Segment margin $ 68,800 600 $139,200 Lesst Common fixed costs 6,750 6,500 15,050 Het operating income (los) $6,050 62,300 TL,200) 0120,150 "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
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