History Bookmarks People Window Help 000/M Inbox (134)- Bookshelf-ex) DHws_chapt

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History Bookmarks People Window Help 000/M Inbox (134)- Bookshelf-ex) DHws_chapter x -> COezto.mheducation.com/hm.tpx eChegg Study:X, - Apps Apple M Netflix G Coogle w https://webauth. D CHEMICAL D State Farm FCU Segmented Income Statement for MSI's Todde Town Tours Product Lines Pos Pet Store Grocery Office Parade Getaway Polka Total Sales revenue Variable costs $145,000 $140,000 $38,000 $323,000 Contribution margin Segment margin Net operating income (loss) 61,000 57,000 34,000 152,000 84,000 83,000 4,000 $171,000 1000 $ 75,400 74,200 400 $150,000 1.900 16150 Less: Direct Fixed costs 8,600 8,800 Less: Common fixed costs* 7.260 7 7,000 11500 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 foxed overhead currently allocated to the POP product would be redistributed to the remaining two products Required: 1. Calculate the incremental efect on profit if the POP product is eliminated. Effect on Profit 2. Should MSI drop the POP produr? Yes 3-a. Caleulate the incremental effect on profa if the POP product is eliminated. Suppose that $1,200 18 MacBook Air

Explanation / Answer

Incremental analysis :

2) No, MSI should not drop the POP product.

Loss if product continue (1500) Loss if product discontinue (1900) Incremental loss if product discontinue (400)

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