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 $503,200 $317,000 $275,800 261,700 155,300 184,800 Cost of goods sold Gross profit Selling and administrative expenses $241,500 $161,700 $91,000 207,700 116,400 152,000 Income (loss) from operations $33,800 $45,300 $(61,000) In addition, you have determined the following information with respect to allocated fixed costs: Cross Golf Training Shoes Running Shoes Shoes Fixed costs: $80,500 $41,200 $38,600 Cost of goods sold Selling and administrative expenses 60,400 38,000 38,600 These fixed costs are used to support all three product lines. In addition, have determined that the inventory is negligible. 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 runnina shoe line. 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 $61,000. a. Are management's decision and conclusions correct? The profit will not Management's decision and conclusion are incorrect will not be avoided if the line is eliminated. be improved because the fixed costs used in manufacturing and selling running shoes b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign; enter all other amounts as positive numbers. Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Running Shoes 503,200 317,000 $ 275,800 Revenues Variable cost of goods sold Manufacturing margin $ $ Variable selling and administrative expenses Contribution margin $ $ $ Fixed costs: Fixed manufacturing costs Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Running Shoes 275,800 Revenues 503,200 317,000 Variable cost of goods sold Manufacturing margin $ $ Variable selling and administrative expenses Contribution margin $ Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs $ $ $ Income from operations c. Use the report in (b) to determine the profit impact of eliminating the running shoes line, assuming no other changes. and the fixed costs If the runnin shoes line were eliminated, then the contribution margin of the product line would eliminated. Thus, the profit of the company would actually by $ profitability of the product by prices, volume, or Management should keep the line and attempt to improve the costs