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 Shoes $5,800,000.00 $6,900,00000 $4,200,000.00 ,016,000.00 3,381000.00 2,814,000.00 $2,784,000.00 $3,519,000.00 $1,386,000.00 436,000.00 2,484,00000 2,142,000.00 348,D00.00 $1,035,000.00 $(756,0DO.D0) 2Revenues Cost of goods sold 4 Gross profit 5 Selling and administrative expenses 6 Income (Loss) from operations In addition, you have determined the following information with respect to allocated fixed costs: Cross raining Golf Shoes Running Shoes Shoes Fixed costs 3 Cost of goods sold 4 Selling and administrative expenses 928,000.00 $897,000.00 $798,000.00 696,000.00 828,00D OD 588,000.00 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 $756,000 Required a. Do you agree with management's decision and conclusions? Explain your answer. (Note: You may wish to complete part (b), the variable costing income statement, first.) b. Prepare a variable costing income statement for the three products. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign. Enter all other amounts as positive numbers. c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. Use the minus sign to indicate a decline in profit. Variable Costing Income Statement Shaded cells have feedback. b. Prepare a variable costing income statement for the three products. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon () ll automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign. Enter all other amounts as positive numbers. Score: 24/156 Winslow Inc. Variable Costing Income Statement Three Product Lines For the Year Ended December 31, 20Y1 Cross Training Gof Shoes Running Shoes $5,800, 3016,000.00 2 Revenues Variable cost of goods sold 4 Fixed selling and administrative expenses 5 Variable selling and adntative expenses 6 Income (Loss) from operations Label) 9 10 Points:5.85/38 Final Question Shaded cells have c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. Use the minus sign to indicate a decline in profit. If the running shoe line is eliminated, the profit of the company would increase/(decline) by Points:011 Labels and Amount Descriptions Labels December 31, 20Y1 Fixed costs For the Year Ended December 31, 20Y1 Amount Descriptions Contribution margin Contribution margin ratio Fixed manufacturing costs Fixed selling and administrative expenses Income (Loss) from operations Manufacturing margin Revenues Sales mix Total fixed costs Variable cost of goods sold Variable selling and administrative expenses 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 Shoes $5,800,000.00 $6,900,00000 $4,200,000.00 ,016,000.00 3,381000.00 2,814,000.00 $2,784,000.00 $3,519,000.00 $1,386,000.00 436,000.00 2,484,00000 2,142,000.00 348,D00.00 $1,035,000.00 $(756,0DO.D0) 2Revenues Cost of goods sold 4 Gross profit 5 Selling and administrative expenses 6 Income (Loss) from operations In addition, you have determined the following information with respect to allocated fixed costs: Cross raining Golf Shoes Running Shoes Shoes Fixed costs 3 Cost of goods sold 4 Selling and administrative expenses 928,000.00 $897,000.00 $798,000.00 696,000.00 828,00D OD 588,000.00 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 $756,000 Required a. Do you agree with management's decision and conclusions? Explain your answer. (Note: You may wish to complete part (b), the variable costing income statement, first.) b. Prepare a variable costing income statement for the three products. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign. Enter all other amounts as positive numbers. c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. Use the minus sign to indicate a decline in profit. Variable Costing Income Statement Shaded cells have feedback. b. Prepare a variable costing income statement for the three products. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon () ll automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign. Enter all other amounts as positive numbers. Score: 24/156 Winslow Inc. Variable Costing Income Statement Three Product Lines For the Year Ended December 31, 20Y1 Cross Training Gof Shoes Running Shoes $5,800, 3016,000.00 2 Revenues Variable cost of goods sold 4 Fixed selling and administrative expenses 5 Variable selling and adntative expenses 6 Income (Loss) from operations Label) 9 10 Points:5.85/38 Final Question Shaded cells have c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. Use the minus sign to indicate a decline in profit. If the running shoe line is eliminated, the profit of the company would increase/(decline) by Points:011 Labels and Amount Descriptions Labels December 31, 20Y1 Fixed costs For the Year Ended December 31, 20Y1 Amount Descriptions Contribution margin Contribution margin ratio Fixed manufacturing costs Fixed selling and administrative expenses Income (Loss) from operations Manufacturing margin Revenues Sales mix Total fixed costs Variable cost of goods sold Variable selling and administrative expenses