Answer:
Winslow Inc.
a. I do not agree with management's decision and conclusions.  Before the elimination of the Running Shoes Department, the company recorded a total net profit of $7,900.  After the elimination, the company recorded a total net loss of $112,600.
b. Variable Costing Income Statement for the three products:
Winslow Inc. Product Income Statements—Variable Costing For the Year Ended December 31, 20Y1
1                                   Cross Training   Golf Shoes   Running 
                                              Shoes                             Shoes
2. Revenues                      $850,000  $700,000   $635,000
3. Variable Costs:
Cost of goods sold             284,500     248,400     298,500
Selling & admin. expenses 293,100      175,500      216,000
Total variable costs            577,600     423,900      514,500
4. Contribution margin    $272,400    $276,100   $120,500
5. Fixed Costs:
Cost of goods sold            128,500        90,300     120,500
Selling and admin. exp.      95,900        82,400     143,500
Total fixed costs               224,400       172,700    264,000
6. Income (Loss) from
 operations                       $48,000    $103,400  ($143,500)    $7,900
c. The impact of eliminating the running shoe line is the increase of the net operating loss from a net profit of $7,900 to $112, 600.
Explanation:
a) Data and Calculations:
Winslow Inc. Product Income Statements—Absorption Costing For the Year Ended December 31, 20Y1
1                                       Cross Training   Golf Shoes   Running 
                                              Shoes                                  Shoes
2. Revenues                    $850,000.00 $700,000.00 $635,000.00
3. Cost of goods sold        413,000.00    338,700.00     419,000.00
4. Gross profit                 $437,000.00  $361,300.00   $216,000.00
5. Selling and
 administrative expenses 389,000.00  257,900.00     359,500.00
6. Income (Loss) from
 operations                       $48,000.00 $103,400.00  ($143,500.00)
1                                 Cross Training   Golf Shoes   Running 
                                              Shoes                             Shoes
2. Revenues                    $850,000   $700,000   $635,000
3. Cost of goods sold
Variable cost                      284,500     248,400     298,500
Fixed cost                           128,500       90,300      120,500
Total cost of goods sold    413,000     338,700       419,000
4. Gross profit                 $437,000   $361,300     $216,000
5. Selling and
 administrative expenses
Variable cost                      293,100     175,500       216,000
Fixed cost                            95,900      82,400       143,500
Total selling & admin.       389,000    257,900      359,500
6. Income (Loss) from
 operations                       $48,000   $103,400    ($143,500)     $7,900
Elimination of the Running Shoes Department:
1                                 Cross Training   Golf Shoes   Total
                                              Shoes                        
2. Revenues                    $850,000   $700,000   $1,550,000
3. Cost of goods sold
Variable cost                      284,500     248,400       532,900
Fixed cost                           128,500       90,300        339,300
Total cost of goods sold    413,000     338,700        872,200
4. Gross profit                 $437,000   $361,300      $677,800
5. Selling and
 administrative expenses
Variable cost                      293,100     175,500       468,600
Fixed cost                            95,900      82,400        321,800
Total selling & admin.       389,000    257,900       790,400
6. Income (Loss) from
 operations                       $48,000   $103,400     ($112,600)