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Variable and Absorption Cosong Winslow Inc. manufactures and sets three types of shoes. The income statements prepared under the absorption costing method for the three
Variable and Absorption Cosong Winslow Inc. manufactures and sets 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, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues $337.100 $192,100 $159,400 Cost of goods sold 175,300 94,100 106,800 Gross profit $161,800 $98,000 $52,600 Selling and administrative expenses 139,100 20,600 87,800 Income (loss) from operations $22,700 $27,400 $35,200) In addition, you have determined the following information with respect to allocated foved costs: Cross Golf Running Training Shoes Shoes Shoes Fixed costs Cost of goods sold $59,900 $25,000 $22,100 Selling and administrative expenses 40,500 23,100 22,300 These costs and to support three product lines. In addition, you have determined that the inventory is religible The management of the company has deemed the profit performance of the running shoelines unacceptable. As a result, it has decided to eliminate the running shoe in Management does not expect to be able to increases in the other two lines. However, as a result of eliminating the running shoeline, management expects the profits of the company to create by $35,200 numbers. Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Revenues 337.100 192,100 Variable cost of goods sold X Running Shoes 159.400 Manufacturing margin V Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Income from operations
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