Variable and Absorption Costing-Three Products Window Inc. andadures and sells three types of shoes. The income statements prepared under the absorption casting method for the three shoes are as follows Wine Inc. Product Income Statements Absorption Costing For the Year Ended December 31, 2011 Cross Training Shoes Golf Showing Shoes 4,900 $3200 Cost of goods sold 1.500 14300 $205.200 517600 11.00 1000 Sching and me $300 34 0.001 otromos In addition, you have and the ongoion with towed Crow G Tree 530 S100 8 5 4 5 5 P 2 Y U 1 w E R H G S D M N V B C N HP Laptop Do more from anywhere. All-day long RTPHONE FOR Features BOOK These faced costs are used to support all three product lines. In addition, you have determined that the inventory is negligible. The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a result, it has deaded to eliminate the running shoe line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoe line, management expects the profits of the company to increase by $47,200. a. Are management's decision and conclusions correct? Management's decision and condusion are manufacturing and selling running shoes The profit be improved because the foxed costs used in be avoided if the line is eliminated. b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a mission enter another amounts as positive numbers. Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Previous Fored costs de EN Check My Work 8 7 00 6 s 4 5 U T E E R K K - H. Fored costs: ] 0000 Totalfixed costs Income from operations Use the report in to determine the profit impact of eliminating the ring shoes in, assuming no other changes If the ring shoes me were imated, then the contribution of the product line would and the Beast beated. Thus, the profit of the company would keep the line and atteotto move the profit of the product by UM Che Wan O 9 7 8. B 5 4 5 6 3 P 1 Y U 4 T w E K K H G D S M M N V hp HP Laptop Do more from anywhere. All-day long. FOR 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 $427,400 $247,900 $213,200 Cost of goods sold 222.200 121,500 Gross profit $205,200 $126,400 $70,400 Seling and administrative expenses 176,500 91.000 117,600 Income (less) from operations $28,700 $35,000 $147,200) In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Shoes Goll Shoes Running Shoes Fixed costs Cost of oods sold $68.400 $32,200 $29.000 Selling and dative expenses 51,300 29,700 29.800 Therefore costs are used to support all three producties. In addition, you have determined that the inventory is negligible Check My Work 6 8 D U H K B IN M M The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a result, it has decided to climinate the running shoe line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoe line, management expects the profits of the company to increase by $47,200. a. Are management's decision and conclusions correct? Management's decision and conclusion are manufacturing and selling running shoes . The profit be improved because the fixed costs used in be avoided if the line is eliminated. b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a mnus signcenter af other amounts as positive numbers. Winslow Inc. Variable Costing Income Statements - Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Forced costs Check My Wor OENG O 5 9 6 P R o IC G F H K V B N M L Fored costs: 2 Totalfoved costs Income from operations c. Use the report in (b) to determine the profit impact of eliminating the running shoes line, assuming no other changes. If the running shoes line wereliminated, then the contribution margin of the product line would and the fored costs be climinated. Thus, the profit of the company would actually by Management should keep the line and attempt to prove the profitability of the product by price volume, Check My Work 0 4 10/11 P R = H K N N M HP Laptop Do more from anywhere. All-day long