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please help! Variable and Absorption Costing-Three Products Winslow Inc, manufactures and sells three types of shoes. The income statements prepared under the absorption costing method
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Variable and Absorption Costing-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, 2011 Cross Training Shoes Golf Shoes Running Shoes Revenues $512,400 $322,800 $274,400 Cost of goods sold (266,400) (158,200) (183,800) Gross profit $246,000 $164,600 $90,600 Selling and administrative expenses (211,600) (118,500) (151,300) Operating income $34,400 $46,100 $(60,700) In addition, you have determined the following information with respect to allocated fixed costs Cross Golf Running Training Shoes Shoes Shoes Fixed costs Cost of goods sold $82,000 $42,000 538,400 Selling and administrative expenses 61,500 38,700 38,400 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 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 shoeline Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoeline mananement exact the notits the comany times by 66000 Check My Work 7 more Check My Work uses remaining Management's decision and conclusion are incorrect The profit will not be improved because the fixed costs used in manufacturing and selling running shoes will not be avoided if the line is eliminated Feedback Check My Wor Consider the impact the elimination of the running shoe line would have on the fixed costs b. Prepare a variable coating income statement for the three products, inter 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, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin DODUOD Fred costs Fixed manufacturing costs o Running Shoes Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Revenues Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs Fixed manufacturing costs Fixed selling and administrative expenses QUOD QUOD Total fixed costs Operating income (loss) Fath Step by Step Solution
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