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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 Statements-Absorption Costing For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Revenues $321,100 $186,200 $162,000 Cost of goods sold (167.000) (91,200) (108,500) Gross profit 5150,100 $95,000 $53,500 Selling and administrative expenses (132,500) (68;400) (89,300) Operating income $21,600 $26,600 $(35,000) In addition, you have determined the following information with respect to allocated wed costs: Cross Golt Running Training Shoes Shoes Shoes Fixed costs Cost of goods sold $51,400 $24,200 $22,700 Selling and administrative expenses 38,500 22,300 22,700 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 shot lineas unacceptable. As a result, it has decided to eliminate the running shoeline Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoeline, management expects the profits of the wereinroexposureovems reportwournautyunsanuarrestru company to increase by $35,800 a. Are management's decision and conclusions correct? Management's decision and conclusion are The profit running shoes be avoided it the line is eliminated be improved because the foxed costs used in manufacturing and selling b. Prepare a variable costing income statement for the three products Enter a net loss wa negative number wunga minus sign Winslow Inc. Variable Costing Income Statements Three Product Lines For the Year Ended December 31, 2011 Cross Training Shoes Golf Shoes Running Shoes Fixed costs dini IO QUOD Dopo Total fixed costs Operating income (loss)

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