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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. Product Income StatementsAbsorption Costing For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues $534,400 $320,600 $275,700 Cost of goods sold 277,900 157,100 184,700 Gross profit $256,500 $163,500 $91,000 Selling and administrative expenses 220,600 117,700 152,000 Income (loss) from operations $35,900 $45,800 $(61,000) In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Shoes Golf Shoes Running Shoes Fixed costs: Cost of goods sold $85,500 $41,700 $38,600 Selling and administrative expenses 64,100 38,500 38,600 These fixed costs are used to support all three product lines. In addition, you have determined that the inventory is negligible. 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 $61,000.

c. Use the report in (b) to determine the profit impact of eliminating the running shoes line, assuming no other changes. be If the running shoes line were eliminated, then the contribution margin of the product line would be eliminated and the fixed costs would not eliminated. Thus, the profit of the company would actually decline by $ - Management should keep the line and attempt to improve the profitability of the product by increasing prices, increasing volume, or reducing costs. b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign; enter all other amounts as positive numbers. Winslow Inc. Variable Costing Income Statements-Three Product Lines For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Running Shoes 275,700 Revenues 534,400 320,600 Variable cost of goods sold Manufacturing margin $ $ Variable selling and administrative expenses Contribution margin $ $ Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses not bild Total fixed costs $ $ Income from operations $

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