# Variable and Absorption Costing-Three ProductsWinslow Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the threeshoes are as follows:Winslow Inc.Product Income Statements-Absorption CostingFor the Year Ended December 31, 20Y1Cross Training ShoesGolf ShoesRunning Shoes\$5,800,000\$6,900,000\$4,200,000RevenuesCost of goods sold(3,016,000)(3,381,000)(2,814,000)Gross profit\$2,784,000\$3,519,000\$1,386,000Selling and administrative expenses(2,436,000)(2,484,000)(2,142,000)\$1,035,000\$(756,000)Operating income\$348,000In addition, you have determined the following information with respect to allocated fixed costs:CrossGolfRunningTrainingShoesShoesShoesFixed costs:Cost of goods sold\$928,000 \$897,000 \$798,000Selling and administrative expenses828,000696,000588,000These 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 b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign.Winslow Inc.Variable Costing Income Statements-Three Product LinesFor the Year Ended December 31, 20Y1Cross Training ShoesGolf ShoesRunning ShoesFixed costs:Total fixed costsOperating income (loss)

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Step 1

Formula to compute the variable cost of goods sold.

Step 2

Formula to compute the Variable selling and a...

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