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 method for the three shoes are as follows: Fleet-of-Foot Inc. Product Income Statements-Absorption Costing For the Year Ended December 31 Cross Training Shoes Revenues Cost of goods sold Gross profit Selling and administrative expenses Operating income Golf Shoes Running Shoes $382,600 $225,700 $189,600 (199,000) (110,600) (127,000) $183,600 $115,100 $62,600 (157,900) (82,900) (104,500) $25,700 $32,200 $(41,900) In addition, you have determined the following information with respect to allocated foxed costs Fixed costs Cost of goods sold Selling and administrative expenses Cross Training Shoes Golf Shoes Running Shoes $61,200 45,900 $29,300 27.100 $26,500 26,500 These fixed costs are used to support all three product ines and will not change with the elimination of any one product in addition, you have determined that the ebects of inventory may be ignored. The management of the company has deemed the profit performance of the numning shon line as unacceptable. As a result it has decided to eliminate the running shoe ine Management does not expect to be able to increase sales in the other two lines. However, as a result or eliminating the running shoe tine, management expects the profits of the company to increase by $41,900. a. Are management's decision and conclusions correct? Management's decision and conclusion are C selling running shoes The profit be avoided if the line is eliminated be improved because the fixed costs used in manufacturing and b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign Fleet-of-Foot Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31 b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign. Fleet-of-Foot Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31 Cross Training Golf Shoes Line Item Description Shoes Running Shoes Fixed costs Total fixed costs Operating income (loss) minn nn other channas c. Use the report in (b) to determine the prot 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 line would C eliminated. Thus, the prott of the company would actually of the product by prices by S volume, or and the Sxed costs De Management should keep the line and atempt to improve the protability costs