Variable, and Absorption Costing - Three Products Hiect-of foot Ince manufactures and sells three types of shoes. The income statements prepsed under the absorption costing method for the three shoes are as followi. Feet-of-Foot Inci Product Income Statements - Absorption Costing For the Year Ended Derminer 21 In addibion, you have determined the following information with respect to allocated fised costs: These fined costs are used to support all three product lines and will not chapge wath the elimination of any one product, In additiory you have determined that the efiects of minentory may be ignored. The manegement of the company has deemed the probt performance of the running shon line as unacceptable. As a reailf, it hars decided to eluminate the running stae line. Monepertient soes not soxpect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoe line, manisgement txogeds the profits of the company to incrase by $60,100. a. Are management's decision and conchusions correct? Managemient's decuson and conclusicn are The profit be improved because the fixed costs used in maiufocturing aod seling runining Noses be avoided af the line is eliminated. c. Use the repart in (b) to determine the protit impact of eliminating the running shon line, assuming no other changes: If the running shoes live were elasenated, then the contribution margin of the product line would and the fixed costs Thin, the protit of the compary would actually by 4 by uricts, costs