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 $433,600 $251,500 $218,800 Cost of goods sold (225,500) (123,200) (146,600) Gross profit $208,100 $128,300 572,200 Selling and administrative expenses (179,000) (92,400) (120,600) Operating income $29,100 $35,900 $(48,400) In addition, you have determined the following information with respect to allocated foxed costs: Cross Golf Training Running Shoes Shoes Shoes Fixed costs Cost of goods sold $69.400 $32,700 $30,600 Selling and administrative expenses 52,000 30,200 30,600 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 shoeline, management expects the profits of the company to increase by $48,400 Consider the impact the elimination of the running shoe line would have on the fixed costs 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, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues 433.600 251.500 218,80D Variable cost of goods sold 116,000 X Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses 19.400 32,700 30,600 52.000 10,200 30.000 121.400 61,900 61,200 Total fixed costs 29.100 35.900 -48.400 Operating income (loss)