Variable and Absorption Costing-Three Products Fleet-of-Foot Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing Fleet-of-Foot Inc. Product Income Statements-Absorption Costing For the Year Ended December 31 Cross Training Shoes Golf Shoes Running Shoes Revenues $473,600 $270,000 $234,900 Cost of goods sold (246,300) (132,300) (157,400) Gross profit $227,300 $137,700 $77,500 Selling and administrative expenses (195,500) (99,100) (129,400) Operating income $31,800 $38,600 $(51,900) In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Shoes Golf Shoes Running Shoes Fixed costs: Cost of goods sold Selling and administrative expenses I $75,800 56,800 $35,100 32,400 $32,900 32,900 These fixed costs are used to support all three product lines and will not change with the elimination of any one product. In ac The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a result, it two lines. However, as a result of eliminating the running shoe line, management expects the profits of the company to increas a. Are management's decision and conclusions correct? Management's decision and conclusion are incorrect . The profit will not be improved because the fixe Line Item Description 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 Total fixed costs Operating income (loss) Training Shoes 10000 00000 Golf Shoes Running Shoes Feedback Check My Work When recasting the variable costing income statement, remember that under variable costing, all Manufacturing Margin - Variable Selling and Administrative Expenses Contribution Margin; Cont c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming not If the running shoes line were eliminated, then the contribution margin of the product line would be elin decline Management should keep the line and attempt to improve the pro by $