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 $352,100 $204200 5173,600 Cost of goods sold (183,100) (100,100) (116,100) Gross profit $169,000 $104,100 $57,300 Selling and administrative expenses (145,300) (75,000 (95,700) Operating income $23,700 $29,100 $(38,400) In addition, you have determined the following information with respect to allocated fixed costs: Cross Golf Training Running Shoes Shoes Shoes Fixed costs Cost of goods sold $56,300 $26,500 524,300 Selling and administrative expenses 42.300 24.500 24,300 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 COSTOSO USA Selling and administrative expenses 42,300 24,500 24,300 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 ay 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 anagement does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoeline, management expects the profits of the company to increase by $38,400 a. Are management's decision and conclusions correct? Management's decision and conclusion are Shoes be avoided if the line is eliminated The pront 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 Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Winslow Inc. Variable Couting Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes bido) DODO boclo Fixed costs duo do boni Total fixed costs Operating income (los) c. Use the report in (b) to determine the profit impact of eliminating the running shoeline, assuming no other changes If the running shoes line were eliminated, then the contribution margin of the product line would and the fixed costs be eliminated. Thus the profit of the company would actually by Management should keep the line and attempt to improve the potability of the product by prices volume, or COS