Chapter 21 Homework (Application) nable and Aston Casting-Three Products Winslow Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows Winslow Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 201 Revenues Cost of goods sold Cr Selling and adinistrative expenses Operating income Cross Training Shoes Golf Shoes Running Shoes $415,500 $245.100 $210,000 (214,100) (120,100) (141,200) $199,400 $125,000 $69,600 (171,500) (90,000) 127,900 $35.000 (116,200) (45.600) In soon, you have determined the fullwing information with respect to allocated fixed costs Fed costs Cost of goods sold Selling and administrative expenses Cross Training Shoes Golf Running Shoes Shoes 166,500 $31,000 $29,500 49,900 29,400 29,500 These fired 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 effects 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 shoe line. Management does not expect to be able to increase sales in the other his lines. However, as a result of eliminating the running shoe ine, management expects the profits of the company to increase by $46,600. Are managements deosun and conclusions correct Management's decision and conclusion are incorrect ine is eliminated more Check My Wing The profit will not be improved because the fixed costs used in manufacturing and selling running shoes will not be avoided if the Previous Next > b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 201 Bevenuss Bendadurina marain Maciatis anilina ant atmnatragove. EDERALS Contribution marain Fixed costs Fired in modecturing resta Cross Training Shoes Golf Shoes Running Shoes 415,300 241,100 210,800 A 81.200 156900 100 3 6,300 fixed seling and administrative extemes Tutal fixed c 1,500 116,000 31,900 29,400 61300 29,300 11,000 Operating income (100) 27,500 32.300 X 6500 When recasting the variable costing income statement, remember that under variable costing, all fixed factory overhead costs are deducted in the period incurred. Revenues-Variable Cost of Goods Sold Manufacturing Margin; Manufacturing Margin Variable Selling and Administrative Expenses Contribution Margin, Contribution Margin (Fixed Manufacturing Costs Fixed Selling and Administrative Expenses) Operating income