Managerial accounting Question 1

Williams Products Inc. manufactures and sells a number of items, including school knapsacks. The company has been experiencing losses on the knapsacks for some time, as shown by the contribution format income statement below: WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 Sales $290,000 Variable expenses: Variable manufacturing expenses $ 81,200 Sales commissions 31,900 Shipping 8,700 Total variable expenses 121,800 Contribution margin 168,200 Fixed expenses: Salary of product-line manager 11,250 General factory overhead 57,850* Depreciation of equipment (no resale value) 22,000 Advertising-traceable 53,950 Insurance on inventories 4,800 Purchasing department 33,640 T Total fixed expenses 183,490 Operating loss $ (15,290) *Allocated on the basis of machine-hours. Allocated on the basis of sales dollars