Vanable and Absorpbion Costing-Three Products Feet-of-Foot Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing mechod for the three shoes are as foliows: Fleet-of-Foot Inc. Product Income Statements - Absorption Costing 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 will not change with the elimination of any one product. In addition, vou have determined that the effects of inventory may be ignored. The management of the company has deemed the profit performance of the nunning shoe line as unocceptable. As a resuat, it has decided to elimingte the running shoe line, Management does not expect to be able to increase sales in the other two lines. Howevec, as a result of elminating the running shoe line, manogement expects the profits of the company to increase by $49,700. a. Are management's decision and canclusiens cerrect? Management's decision and conclusion are The pront be improved because the fixed costs used in munufacturing and seling ruming shoes will not - be aroided if the line is eliminated. a. Are management's decision and conclusions correct? Management's decision and conclusion are. The profe shoes be avoided af the line is eliminated. be improved because the fixed costs used in manufacturing and selling running b. Prepare a variable 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 ine would and the fixed costs eliminated. Thus, the profit of the compary would actually by 5 Management should keep the line and attempt to improve the profitabity of 2 move Check My Work uses temaining