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 shees are as foliows: In addition, you have determined the following information with respect to allocated fixed costs: These fored costs are used to support ail 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, ik has dedded 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 $60,400. 3. Are management's decision and conclusions correct? Manapement's decision and condusion are The profit be improved because the ficed costs used in manufacturing and selling running shoes be avoided if the line is eliminated. 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 and the fixed costs be eliminated. Thus, the profit of the company would actually by 5 Management strould kecp the line and attempt to improve the profitability of the product by prices, volume, or costs