Verable and Absorption Costing - Three Products Fieet-at-Foot Inc. manufactures and selis three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows. Fleet-of-Foot Inc. Product Income Statements-Absorption Costing In additian, you have determined the following information with respect to allocated fixed costs: These fixed costs are used to suppont all three product lhes and wil not change with the elimination of any one product. In addition, you have determined that the effects of inventory ma be ignsred The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a resul, it has decided to eliminate the running shoe line. Management coes not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running thpe thne, management expects the protits of the company to increase b The management of the company has deemed the profit performance of the running shoe line as unacceptable. As a rosult, it has decided to eliminate the nunhing shoe line. Management ooes not expect to be able to increaso sales in the other two lines, However, as a resuit of eliminating the running shoe line, management expects the profits of the compary to increage 552,100 3. Are management's decision and conclusions correct? Management's Gecisign and conclusion are . The profit be improved because the fixed costs ised in manufacturing and seling ranning shoe 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 nunning shoes line were eliminated, then the conthbution margin of the product line would be eliminated. Thus, the profit of the company would actusily Manugement should keep the line and attempt to improve the profitability of the product by