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: $260,000 WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 Sales Variable expenses Variable manufacturing expenses $72,800 Sales commissions 28.500 Shipping 7.800 Total variable expenses 109,200 150,00 Contribution margin Pixed expenses Salary of product-line manager General factory overhead Depreciation of equipment no resale value) Advertising traceable Trsurance on inventories Purchasing department 9.750 $1,550 19.000 51.850 4,200 30,7601 Total fixed expenses 167, 110 Operating loss $(16,310) "Allocated on the basis of machine-hours. TAllocated on the basis of sales dollars. Discontinuing the knapsacks would not affect sales of other product lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses. Required: a. Compute the increase or decrease of net operating income If the Williams Products Inc ine is continued or discontinued. (Input all amounts as positive except Decreases in Sales, Decreases in Contribution Margin, and Net Losses which should be indicated by a minus sign.) Koop School Drop School Knapsack Knapsack Difference: Operating Income Increase or (Decrease) $ (260,000) $ 260,000 Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: I of 260,000 (260,000) Salary of product-line manager General factory overhead Depreciation of equipment Advertising-traceable Insurance on inventories Purchasing department Total fixed expenses Operating loss $ 260,000 $ 0 0 0 $ (260,000) b. Would you recommend that the Williams Products Inc line be discontinued? Yes