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MSI is considering eliminating a product from its Toddle Town Tours collection. This collection is aimed at children one to three years of age and includes "tours of a hypothetical town. Two products, The Pel Store Parade and The Grocery Getaway, have mpressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others Several other CDs are planned for this collection, but none is re ady for production. MSI s information related to the ToddleTown Tours collection follows Segmontad incoms Stataman: for MST ToddleTown Tours Product Lines ost Pet Store Grocery Cfice Parade Getawy Polka Total Ssles revenue Varlable costs $120,000 $115,000 33,000 $288,000 Contribution margin Segment margin Not operating incoma (loss) Less: Direct Fixed costs .300 3 81400 0,700 93123 000 LesE: Comion fixed costs 1,050 Allocated based on total sales dollars MSI has delermined that eliminaton of the Post office Polka (POP) program would not impact sales of the other two items. The remaining fed overhead curently allocaled to the POP product would be redistribuled to the remaining two producis. Required: 1. Calculate the incremental effect on proft if the POP product is eliminated. on Prof: 2. Should MSI drop the POP product? O No 3-a. Calculate the incremental effect on prontifthe POP product is elminated Suppose that $1,200 of the common fixed costs could be avoided if the POP product Ine were el minated. t on Prof

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