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Variable and Absorption Costing-Three Products Shoes R' Us, Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows: Shoes R' Us, Inc. Product Income Statements-Absorption Costing For the Year Ended December 31, 2014 Athletic Shoes Casual Shoes Work Shoes $271,500 181,900 $89,600 149,600 $-60,000 In addition, you have determined the following information with respect to allocated fixed costs Revenues Cost of goods sold Gross profit Selling and administrative expenses Income from operations $528,900 275,000 $253,900 218,400 $35,500 $312,100 152,900 $159,200 114,600 $44,600 Athletic Casual Work ShoesShoes Shoes Fixed costs: Cost of goods sold $84,600 40,600 38,000 Selling and administrative expenses 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 work shoe line as unacceptable. As a result, it has decided to eliminate the work shoe line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the work shoe line, management expects the profits of the company to increase by $60,000 63,500 37,500 38,000