Winslow Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption...
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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, 20Y1 Revenues Cost of goods sold Gross profit Selling and administrative expenses Income (loss) from operations Cross Training Shoes Golf Shoes Fixed costs: $5,800,000 $6,900,000 3,016,000 3,381,000 $2,784,000 $3,519,000 2,436,000 2,484,000 $348,000 $1,035,000 In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Shoes Golf Running Shoes Shoes Running Shoes a. Are management's decision and conclusions correct? Management's decision and conclusion are the line is eliminated. $4,200,000 2,814,000 $1,386,000 2,142,000 $(756,000) Cost of goods sold $928,000 $897,000 $798,000 Selling and administrative expenses 696,000 828,000 588,000 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 $756,000. The profit be improved because the fixed costs used in manufacturing and selling running shoes be avoided if b. Prepare 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 Revenues Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Income from operations Cross Training Shoes Golf Shoes Running Shoes gobobl ooppl DOO OOODI 1000000 $ 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, 20Y1 Revenues Cost of goods sold Gross profit Selling and administrative expenses Income (loss) from operations Cross Training Shoes Golf Shoes Fixed costs: $5,800,000 $6,900,000 3,016,000 3,381,000 $2,784,000 $3,519,000 2,436,000 2,484,000 $348,000 $1,035,000 In addition, you have determined the following information with respect to allocated fixed costs: Cross Training Shoes Golf Running Shoes Shoes Running Shoes a. Are management's decision and conclusions correct? Management's decision and conclusion are the line is eliminated. $4,200,000 2,814,000 $1,386,000 2,142,000 $(756,000) Cost of goods sold $928,000 $897,000 $798,000 Selling and administrative expenses 696,000 828,000 588,000 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 $756,000. The profit be improved because the fixed costs used in manufacturing and selling running shoes be avoided if b. Prepare 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 Revenues Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Income from operations Cross Training Shoes Golf Shoes Running Shoes gobobl ooppl DOO OOODI 1000000 $
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Related Book For
Managerial Accounting
ISBN: 978-1337270595
14th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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