Variable and Absorption CostingThree 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 StatementsAbsorption Costing For the Year Ended December 31, 20Y1
	Cross Training Shoes		Golf Shoes		Running Shoes
Revenues	$540,300		$324,200		$269,100
Cost of goods sold	(281,000)		(158,900)		(180,300)
Gross profit	$259,300		$165,300		$88,800
Selling and administrative expenses	(223,000)		(119,000)		(148,300)
Operating income	$36,300		$46,300		$(59,500)

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	$86,400		$42,100		$37,700
Selling and administrative expenses	64,800		38,900		37,700

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 $59,500.

PLEASE ANSWER JUST EMPTY BOX X

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, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues $324,200 $269,100 $540,300 (281,000) Cost of goods sold (158,900) (180,300) Gross profit $259,300 $165,300 $88,800 (148,300) Selling and administrative expenses (223,000) (119,000) Operating income $36,300 $46,300 $(59,500) In addition, you have determined the following information with respect to allocated fixed costs: Golf Cross Training Shoes Running Shoes Shoes Fixed costs: Cost of goods sold $86,400 $42,100 $37,700 Selling and administrative expenses 64,800 38,900 37,700 These fixed costs are used to support all three product lines and will 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 $59,500. c. Use the report in (b) to determine the profit 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 be eliminated and the fixed costs would not by $ X. Management should keep the line and attempt to improve the profitability of the product by increasing prices, increasing be eliminated. Thus, the profit of the company would actually decline volume, or reducing costs