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can you please explain part C where it says if running shoes line were elimanted then the contribution margin of the prodcit line would be
can you please explain part C where it says if running shoes line were elimanted then the contribution margin of the prodcit line would be eleomated and the fixed costs would not be eleimnated. Thus the peofot of the company would actually decline by $______. please explain to get that answer.
Fleet-of-Foot Inc. Product Income Statements-Absorption Costing In oddition, you have determined the following information with respect to allocated fixed costs: There floced costs are used to support all three product lines and will not change with the elimination of any one product. In addition, you flave determined that the effects of inventory may be ignared. running shoo line. Management does not expect to be able to increose sales in the other two lines. However, as a result af eliminoting the rusining inoe ine. manogement expects the profits of the company to increase by $41,500. a. Are inanagement's decision and conclusions cortect? a. Are management's decision and conctusions correct? Managemint's decision and conclusion are , The profit be improved becouse the fixed costs used in manufacturing and belling running shoes be avoided if the line is eliminated. Fresthark: "Check My Wuat Consiser the impact the edimination of the running shoe ilne wosild have on the forkd costs D. Prepare a vanable costing income statement for the three products:- Enter a net loss as a negative number using a minus sign. c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. If the running shoes line were eliminated, then the contribution margin of the product line would and the fred costs be eliminated. Thus, the profit of the company would actually by X. Management should krep the line and atternpt to improve the profitability of the product by prices, volume, or cost Step by Step Solution
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