Variable and Absorption Costing$-$Three Products

Fleet$-$of$-$Foot Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows:

Fleet$-$of$-$Foot Inc.

Product Income Statements$-$Absorption Costing

For the Year Ended December $31$

In addition, you have determined the following information with respect to allocated fixed costs:

Cross Training Shoes Golf Shoes Running Shoes

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. two lines. However, as a result of eliminating the running shoe line, management expects the profits of the company to increase by $\backslash (\backslash$$ $47,700\backslash ).$

a$.$ Are management's decision and conclusions correct? b$.$ Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign.

Fleet$-$of$-$Foot Inc.

Variable Costing Income Statements$-$Three Product Lines

For the Year Ended December $31$