Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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 Cost of goods sold Gross profit Selling and administrative expenses Operating Income $341,500 $215,100 $182,800 (177,600) (105,400) (122,500) $163,900 $109,700 $60,300 (141,000) (79,000) (100,700) $22,900 $30,700 $(40,400) In addition, you have determined the following information with respect to allocated fixed costs: Fixed costs: Cost of goods sold Selling and administrative expenses Cross Training Shoes Golf Running Shoes Shoes $54,600 $28,000 $25,600 41,000 25,800 25,600 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. 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. 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 $40,400.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

14th edition

1337270598, 978-1337270595

More Books

Students also viewed these Accounting questions

Question

x 4 P(x) 0.07 0.20 0.38 ? 0.13

Answered: 1 week ago