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Winslow Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 20Y1 In addition, you have determined the following information with respect to allocated
Winslow Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 20Y1 In addition, you have determined the following information with respect to allocated fixed costs: 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 $62,000. c. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. If the running shoes line were eliminated, then the contribution margin of the product line would and the fixed costs be eliminated. Thus, the profit of the company would actually! by $ . Management should keep the line and attempt to improve the profitability of the product by prices, volume, or costs
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