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Mickey hosts a vaudeville show, which involves a two-act structure. First, Mickey has a magic act, assisted by Donald Duck and Pluto, and then Donald performs an opera with Clara Cluck. But the magic hat from the magic act spills over into the opera, as Pluto chases the hat onto the stage and hijinks ensue.
The concept for this short proved too long and too unwieldy for a single short, as the two segments each had the potential to be their own individual short. That was exactly what happened: the opera became the basis for Mickey's Grand Opera, released in 1936, and the magic act served as the plot for Magician Mickey, released in 1937. The main challenge in breaking up the two segments into their own shorts was the magic hat. The answer was that Mickey's Grand Opera also had a magic hat, but it did not belong to Mickey. Also, Pluto was dropped from Magician Mickey, while Donald became a heckler and a less-than-willing recipient of Mickey's magic tricks.