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b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign. Varlable and
b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign. Varlable and Absorption Costing-Three Products Fleet-of-Foot Inc. manufactures and selis three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows: Fleet-of-Foot Inc. In addition, you have determined the following information with respect to allocated fixed costs: These foxed costs are used to support all three product lines and wal not change with the elimination of any one product. in addition, you have determined that the effects of inventory may be ignered. The manegement of the company has deemed the profit performance of the cross training shoe line as unacceptable. As a result, it has decided to eliminate the cross training shoe line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the cross training shoe line, management expects the profits of the company to increase by $240,000. a. Are management's decivion and conclusions correct? Management's decsion and conclusion are . The profit be improved because the fixed costs used in manufacturing and seling cross training shoes be avoided if the line is eliminated. c. Use the report in (b) to determine the profit f pact of eliminating the cross training shoe line, assuming no other changes. If the cross training shoe line were eliminated, then the contribution margin of the product line would and the fixed costs be eliminated. Thus, the profit of the company would actually bys - Management should keep the line and attempt to improve the profitability of the product by prices, volume, or costs
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