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value: 10.00 points Required Information MSI is considering eliminating a product from its ToddleTown Tours collection. This colection is aimed at children one to three
value: 10.00 points Required Information MSI is considering eliminating a product from its ToddleTown Tours collection. This colection 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, sale for the third CD in the collection, The Post Office Polka, have legged 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: Segmented Income Statement for MSI'S Toddle Tawn Tours Product Lines Pos! Pet Store Grocery Omo Parade Getaway Polka Total Sales revenue $150,000 $145,000 $39,000 $334.000 Variable costs 63,000 59.000 30000 157 000 Contrbution margin $ 87,000 $ 88,000 $4,000 $177,000 Less: Direct Fixed costs 8,800 9.100 3.700 21,600 Segment margin 78,200 $ 78,900 $ 300 $155.400 Less: Common fixed 7.500 7,250 1,950 16,700 costs" Net operating income $ 70,7010 $ 69,650 $(1,5501) $138.700 (loss) *Allocated based on total sales dollars. 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 Effect on Profit 2. Should MSI drop the POP product? No 3-a. Calculate the incremental effect on prant in the POP product is eliminated. Suppose that $1,200 of the common fixed costs could he walced if the POP pracuct line were eliminated. Effect an Profit
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