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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. 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 StatementsAbsorption Costing For the Year Ended December 31, ZUYI Cross Training Shoes Golf Shoes Running Shoes Revenues $325,900 $189,000 $164,400 Cost of goods sold (169,500) (92,600) (110,100) Gross prot $156,400 $96,400 $54,300 Selling and administrative expenses (134,500) (69,400) (90,700) Operating income $21,900 $27,000 $86,400) ) In addition, you have determined the following information with respect to allocated xed costs: Cross _ _ _ Golf Running Training Shoes Shoes Shoes Fixed costs: Cost of goods sold $52,100 $24,600 $23,000 Selling and administrative expenses 39,100 22,700 23,000 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 Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs 19080 0 Fixed selling and administrative expenses Total fixed costs 1000 Operating income (loss)Cross _ Golf Running Training Shoes Shoes Shoes Fixed costs: Cost of goods sold $52,100 $24,600 $23,000 Selling and administrative expenses 39,100 22,700 23,000 These xed 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 mayr be ignored. The management of the company has deemed the prot 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 $36,400. a. Are management's decision and conclusions correct? Management's decision and conclusion are incorrect V w/ . The prot will not ' VI be improved because the xed costs used in manufacturing and selling running shoes will not ' V/ be avoided if the line is eliminated. Feedback " VCheckMyWurk Consider the impact the elimination of the running shoe line would have on the xed costs
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