anagement's decision and conclusion are . The profis inhing shoes be avoiffed if the line is diminmed be improved becouse the fixed costs used in manufacturing and selling rCheck My Wonk When recavtiny the variable costing incame statement, remember that under variable costing, all faced factory overthead covts are deducted in the penco incurred. Revenues - Varlable Cost of Goods Sold = Manufacturing Margin; Manufacturing Margin - Variable Selling and Adminlstrative Expenses - Contributan Margin; Contribution Margin - (Fixed Manufacturing Costs + Fixed Selling and Adrinistrative Expenses) = Operating income Use the report in (b) to determine the profit impact of eliminating the nunning shoe tine, assuming no other changes: the running shoes line were eliminated, then the contribution margin of the product line would and the fixed costs by: Management should keep the line and attempt to improve the profitability iminated. Thus, the profit of the company would actually prices. volume, or costs the product by restoock Thlodm, Mon Consider the impact the elimination of the running shoe line would have an sales as well as variable and fixed costs. Variable and Absorpoon Conting-Three Products Winsiow inc manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as foliows Winslow Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 20Y1 In addition, ybu have determined the following information with respect to allocated foxed costs: These fixed costs are used to support all three product lines and will not change with the elimination of any one product, In addition, you have determined that the effect of inventory may be ignored. The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a result, it has decided to eliminate the running shot line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoe line, management expects the profits of the company to increase by $3,100