E7-7 Analyzing Keep-or-Drop Decision [LO 7-2, 7-5] 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 Pet Store Parade and The Grocery Gotaway, have impressive sales However, salos for the third CD in the collection, The Post Otfice Polka, have legged the others. Several other CDs are plenned for this collection, but none is ready for production. MSI's information rclated to the ToddicTown Tours colicction follows: Segmented Income Statement for MSIl's Toddle Town Tours Product Linee Pet Store Grocery Office Parade Getaw Sales revenue Variable costs 37,000 33,000 21,000 1,000 Contribution margin Segment margin Net operating income loss) Less: Direct Fed costs Lesa: Common fixed costs 533300 53,0 1240064700 Allocated based on total salas dollars. MSI has determined that elimination of the Post Otfice Polka (POP) program would not impact sales of the other two items. The remaining foxed ovemead currenty allocated to the POP product would be redistributed to the remaining two products Required: . Calculate the incremental effect on profit if the POP product is climinated 2. Should MSI drop the POP product? O Yes O No 3-a. Calculete the incremental effect on profit if the POP product is eliminated. Suppose that $2.000 of the common fixed costs could be avoided ithe POP product line were elim neted. on Prof