MSI is considering eliminating a product from its ToddleTown Tours collection. T

Question

MSI is considering eliminating a product from its ToddleTown 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 Getaway, have impressive 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 ready for production. MSI's information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI's ToddleTown Tours Product Lines Pet Store Parade Grocery Getawa Post Office Polka Total $115,000 $110,000 $32,000 $257,000 28.000 122,000 $ 66,000 $65,000 $4,000 $135,000 3,000 7,400 58,600 $ 58,000 1,000 $117,600 Sales revenue Variable costs Contribution margin Segment margin Net operating income (loss) 49,000 7,400 5,750 45,000 7,000 5,500 Less: Direct Fixed costs 52,5001000 12,850 (600) $104,750 Less: Common fixed costs Allocated based on total sales dollars.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Pet Store Parade Grocery Gateway Post office Polka Total Sales revenues         115,000.00         110,000.00            32,000.00         257,000.00 Variable costs            49,000.00            45,000.00            28,000.00         122,000.00 Contribution margin'            66,000.00            65,000.00              4,000.00         135,000.00 Less Direct fixed costs              7,400.00              7,000.00              3,000.00            17,400.00 Segment Margin            58,600.00            58,000.00              1,000.00         117,600.00 Less Common fixed costs              5,750.00              5,500.00              1,600.00            12,850.00 Net operating income(Loss)            52,850.00            52,500.00               (600.00)         104,750.00 1) Paticulars Pet Store Parade Grocery Gateway Total Sales revenues         115,000.00         110,000.00         225,000.00 Variable costs            49,000.00            45,000.00            94,000.00 Contribution margin'            66,000.00            65,000.00         131,000.00 Less Direct fixed costs              7,400.00              7,000.00            14,400.00 Segment Margin            58,600.00            58,000.00         116,600.00 Less Common fixed costs              6,567.78              6,282.22            12,850.00 Net operating income(Loss)            52,032.22            51,717.78         103,750.00 3a) Paticulars Pet Store Parade Grocery Gateway Total Sales revenues         115,000.00         110,000.00         225,000.00 Variable costs            49,000.00            45,000.00            94,000.00 Contribution margin'            66,000.00            65,000.00         131,000.00 Less Direct fixed costs              7,400.00              7,000.00            14,400.00 Segment Margin            58,600.00            58,000.00         116,600.00 Less Common fixed costs              5,954.44              5,695.56            11,650.00 Net operating income(Loss)            52,645.56            52,304.44         104,950.00

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