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 Running Shoes Cost of goods sold Gross profit Selling and administrative expenses Income (loss) from operations Golf Shoes $5,800,000 ,900,000 3,381,000 $2,784,000 3,519,000 2,436,000 2,484,000 $348,000 $1,035,000 $4,200,000 2,814,000 $1,386,000 2,142,000 (756,000) 3,016,000 In addition, you have determined the following information with respect to allocated fixed costs Cross Training Shoes Golf Running Shoes Shoes Fixed costs Cost of goods sold 5928,000 $897,000 $798,000 Seling and administrative expenses These fixed costs are used to support all three product lines. In addition, you 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 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 $756,000 a. Are management's decision and conclusions correct? Management's decision and conclusion are incorrect . The profit will not be improved because the fixed costs used in manufacturing and selling running shoes will not be avoided if the line is eliminated 696,000 828,000 588,000