Required information E7-6 through E7.10. The following information applies to the questions displayed below! Moming Sky, Inc. (M5), manufactures and sells computer games. The company has several product lines based on the age range of the target market. MSi sells both individual games as well as packaged sets. Al games are in CD format, and some utilize accessories such as steering wheels, electronic tablets, and hand controls. To date, MSi has developed and manufactured all the CDs itself as wel as the accessories and packaging for all of its products. The gaming market has traditionally been targeted at teenagers and young adults; however, the increasing affordability of computers and the incorporation of computer activities into junior high and elementary school curriculums has led to o Significant increase in sales to younger children, MSI has always included games for younger children but now wants to expand its business to capitalize on changes in the industry. The company currently has excess capacity and is Investigating several possible ways to improve profitability, E7-8 (Algo) Analyzing Keep-or-Drop Decision (LO 7-2, 7-5) 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 logged 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. tested Income Statement for MSIS Toddletown Toare Product Lines Det Doet Store Grocery office Parade Folka Sales revende $55.000 550,000 520,000 5125,000 Variable cost 21.060 Contribution margin 330.000 $25,000 $ 5,500 564,000 Les Direct Fixed cote 5,000 1,400 4.000 12,400 Segnant margin 525,000 1,000 55,600 Leas: Como Fixed coats 12.000 5,120 32.000 Bet operating income lors) 510.920 $23.00 14.120) 19.00 "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 the POP product is eliminated 2. Should MSI drop the POP product? 3-5. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $4,000 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 Ree 2 RAJA Rasa Calculate the incremental effect on profit the POP product is eliminated Efect on Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3A Req 3B Should MSI drop the POP product? Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Req 3B Should MSI drop the POP product? Should MSI drop the POP product