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:

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Chapter 07 Homework (Application) eBook Calculator 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 $469,700 $291,200 $250,400 Cost of goods sold (244,200) (142,700) (167,800) Gross profit $225,500 $148,500 $82,600 Selling and administrative expenses (193,900) (106,900) (137,900) Operating income $31,600 $41,600 $(55,300) In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Golf Running Shoes Shoes Shoes Fixed costs: Cost of goods sold $75,200 $37,900 $35,100 Selling and administrative expenses 56,400 34,900 35,100 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 effects of inventory may be ignored. 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 $55,300.Chapter 07 Homework (Application) eBook Calculator Check My Work Consider the impact the elimination of the running shoe line would have on the fixed costs. b. Prepare a variable costing 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 For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues 469 700 291,200 $ 250,400 Variable cost of goods sold 244,200 X Manufacturing margin Variable selling and administrative expenses y Contribution margin Fixed costs: Fixed manufacturing costs 75,200 37,900 35,100 Fixed selling and administrative expenses v Total fixed costs Operating income (loss) Feedback