Segmented Income Statement for MSI's ToddleTown Tours Product Lines Post Pet Store Grocery Getaway $50,000 21,000 $29,000 3,400 $25,600 12,800 $12,800 Office Polka Parade Total $55,000 25,000 $30,000 5,000 $25,000 14,080 $10,920 $20,000 $125,000 61,000 Sales revenue 15,000 $ 5,000 64,000 12,400 Variable costs Contribution margin 4,000 $1,000 $ 51,600 5,120 Less: Direct Fixed costs Segment margin 32,000 $(4,120) 19,600 Less: Common fixed costs* Net operating income (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 wou to the remaining two products. Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. Decrease Effect on Profit 2. Should MSI drop the POP product? Yes No 3-a. 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. Increase Effect on Profit

Question

How would i find the effect on the profit?

Segmented Income Statement for MSI's
ToddleTown Tours Product Lines
Post
Pet Store
Grocery
Getaway
$50,000
21,000
$29,000
3,400
$25,600
12,800
$12,800
Office
Polka
Parade
Total
$55,000
25,000
$30,000
5,000
$25,000
14,080
$10,920
$20,000 $125,000
61,000
Sales revenue
15,000
$ 5,000 64,000
12,400
Variable costs
Contribution margin
4,000
$1,000 $ 51,600
5,120
Less: Direct Fixed costs
Segment margin
32,000
$(4,120) 19,600
Less: Common fixed costs*
Net operating income (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 wou
to the remaining two products.
Required:
1. Calculate the incremental effect on profit if the POP product is eliminated.
Decrease
Effect on Profit
2. Should MSI drop the POP product?
Yes
No
3-a. 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.
Increase
Effect on Profit

Image Transcription

Segmented Income Statement for MSI's ToddleTown Tours Product Lines Post Pet Store Grocery Getaway $50,000 21,000 $29,000 3,400 $25,600 12,800 $12,800 Office Polka Parade Total $55,000 25,000 $30,000 5,000 $25,000 14,080 $10,920 $20,000 $125,000 61,000 Sales revenue 15,000 $ 5,000 64,000 12,400 Variable costs Contribution margin 4,000 $1,000 $ 51,600 5,120 Less: Direct Fixed costs Segment margin 32,000 $(4,120) 19,600 Less: Common fixed costs* Net operating income (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 wou to the remaining two products. Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. Decrease Effect on Profit 2. Should MSI drop the POP product? Yes No 3-a. 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. Increase Effect on Profit

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: During the current year, merchandise is sold for $98,300 cash and $644,900 on account. The cost of m...

A: Calculate the amount of net sales.

Q: BE 20-1 High-Low Method 1The manufacturing costs of Rosenthal Industries for the first three months...

A: High low method is used in accounting to separate the variable cost & fixed cost from limited da...

Q: Question 2 Prepare adjusting journal entries for Blue Gardening in the GENERAL JOURNAL for the year ...

A: Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to...

Q: Suzy's Cool Treatz is a snow cone stand near the local park. To plan for the future, the owner wants...

A: High-low method is a cost computation technique which separates variable and fixed cost from total c...

Q: Question 1

A: InventoryInventory refers to the Work-in-progress, raw material or the finished goods that are assum...

Q: I need assistance on the following regarding the attached balance sheet and income statement: Requir...

A: Click to see the answer

Q: Required Information [The following Information applies to the questions displayed below.] Chavez Co...

A: Bank reconciliation:Bank statement is prepared by bank, while companies maintains its own records fr...

Q: Current Position Analysis The following data were taken from the balance sheet of Nilo Company at th...

A: Working capital indicate the short term liquid funds available after meeting all the current liabili...

Q: Compute conversion costs given the following data: Direct Materials, $364,700; Direct Labor, $194,00...

A: Conversion Cost: The cost that includes direct labor and factory overheads is reported as conversion...