Varkable and Absorption Costing - Three Products Wislow inc. manufactures and seils 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 In sediagn. you have detertmined the following information with respect fo allocated fored costst. 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 effecte of inventory may be ignored. The management of the company has deemed the profit performance of the runaing shce line as unacceptable. As a result, it nas decided to eliminate the running shee line. Management does not expect to be able to increase sales in the other two lines, However, as a result of eiminating the running shoe line, management expects the profits of the company to increate by $40,000. a. Are management's decision and conclusions correct? Management's decislon and conclusion are The profit be improved because the fixed costs used in manufactuing and selling running 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 number using a minus sign. 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 ine were eliminated, then the contributian margin of the product line would and the fred costs be eliminated. Thus, b. Prepare a variable costang income statement for the three products. Enter a net loss as a negative number using a minus sign. Winslow Inc. Variable Costing Income Statements-Three Product Lines 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 the profit of the company would actually prices