Variable and Absorption Costing-Three Products Winslow Inc. manufactures and sells three types of shoes. The income statements prepared undert Winslow Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Revenues $5,800,000 $6,900,000 $4,200,000 Cost of goods sold (3,016,000) (3,381,000) (2,814,000) Gross profit $2,784,000 $3,519,000 $1,386,000 Selling and administrative expenses (2,436,000) (2,484,000) (2,142,000) Operating income $348,000 $1,035,000 $(756,000) 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 $928,000 $897,000 $798,000 Selling and administrative expenses 696,000 828,000 588,000 These fixed costs are used to support all three product lines and will not change with the elimination of any on inventory may be ignored. The management of the company has deemed the profit performance of the running shoe line as unacceptable. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminat company to increase by $756,000. eBook Calculator The management of the company has deemed the profit performance of the running shoe line as unacce Management does not expect to be able to increase sales in the other two lines. However, as a result of company to increase by $756,000. a. Are management's decision and conclusions correct? be impi Management's decision and conclusion are . The profit shoes 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 numb Winslow Inc. Variable Costing Income Statements Three Product Lines For the Year Ended December 31, 2041 Cross Training Shoes Golf Shoes Running Shoes Fixed costs: CODI OD Total fixed costs Operating income (loss) Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Fond costs: Totalted costs Operating income (los) Use the report in (b) to determine the profit pact of eliminating the running shoeline, a n d no other changes the running shoeline werelminated, then the contribution margin of the product line would and the fixed a Thus, the profit of the company would actually by s Management should koop the line and attempt - volume, or Chuck My Work Che War ung O -2 * *^_ RT YU OP