Window Tnc 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, 2011 Cross Training Shoes Golf Shoes Running Shoes Revenues 3472,900 $269,600 $226,500 Cost of goods sold (245,900) (132,100) (151,800) Gross probit $227.000 $137,500 $74,700 Selling and administrative expenses (195,200) (99,000) (124,700) Operating income 531,800 $38,500 ${50,000 In addition, you have determined the following information with respect to allocated fixed cost Cross Training Shoes Goll Shoes Running Shoes xed costs Cost of goods sold $75,700 $35,000 $31,700 Selling and administrative penses 156,700 32.400 31,700 These fixed costs used to support all the 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 prot performance of the running shoe lineas unacceptable. As a result, it has decided to chinate the nanning shonline Management does not expect to be able to increase sales in the other two lines. However, as a rest of eliminating the running shoe five, management expects the profits of the con The management of the company has deemed the profit performance of the running shoe lines 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 siminating the running shoe ine, management expects the profits of the company to increase by $50,000 2. Are management's decision and conclusions corred? Management's decision and conclusion are The profit be improved because the food costs used in manufacturing and selling running shoes be avoided if the line is eliminated. b. Prepare a variable cooting income statement for the their products. Enter a net loss as a negative number using a mutils sign Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes mood QUOD nand conta Total feed costi Jini D000 Operating income) Winslow Inc Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes cootd 100 costs Dini Quod Total red cost Operating income (1) Use the report in (b) to determine the profit impact of eliminating the running shoeline, assuming no other changes If the running shoes line were eliminated, then the contribution margin of the product line Dould and the found costs be noted Thus, the profit at the company would actually ty Management should keep the line and attempt to improve the profitability of the product by prices volume, or COSTS Variable and option Costing-Three Products Winslow inc. manufactures and all three types et hoes. The incontestament pred noe me sorption conting method for the three shoes are as followers Winslow Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Revenues $472,900 $269,600 $226,500 Cost of goods sold (245,900) (132.100) (151,600) Cross profit 5227,000 $137.500 $24,700 Selling and administrative expenses (195,200) 199,000) (124,7003 Operating income $31,800 538,500 050.000) In addition, you have determined the following information with respect to located costs Cross Goll Running Training Shoes Shoes Shoes Fixed costs Cost of goods sold $75,700 $35,000 $31,700 Selling and administrative expenses 56,700 32.400 33.700 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 elect may be gnored The management of the company has deemed the profit performance of the running shoes unacceptable. As a result, the decided to use these Management does not expect to be able to increase sales in the other two line. Howeves a result of minating the running shoeline management expect the of the company to increase by $50,000 Are management decision and conchons correct Management decision and conclusione shoes be avoided if the line is eliminated The profit be improved by the fixed coded manufacturing and selling b. Prepare a variable costing income statement for the three products Enter a net loss a negative numbering me Winslow Inc. Variable costing Income Statements - Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Freed costs QUOD O! DOJO Total foxed costs Operating income (loss) b. Prepare a variable costing income statement for the three products Enter a netloss as a negative number using a minus sign Winslow Inc. Variable Costing Income Statements Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Fixed costs TII Dino Total fixed costs Operating income foss) c. Use the report in (b) to determine the profit impact of eliminating the running shoeline, assuming no other changes and the fundo If the running shoes line were eliminated, then the contribution margin of the product line would Thus, the profit of the company would actually Management should be the line and empt to improve the theory prices co volume, or