Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Williams Products Inc. manufactures and sells a number of items. including school knapsacl-cs. The company has been experiencing losses on the knapsacks for some time.

image text in transcribedimage text in transcribed
Williams Products Inc. manufactures and sells a number of items. including school knapsacl-cs. The company has been experiencing losses on the knapsacks for some time. as shown by the contribution format Income statement below: WILLIAMS PRODUCT INC. Income StatementSchool Knapeaoke For the Quarter Ended June 30 Sales $260,000 Variable expenses: Variable manufacturing expenses $?2,B00 Sales commissions 23,500 Shipping ?,B00 Total variable expenses 109,200 Contribution margin 150,800 Fixed expenses: Salary of productline manager 9,?50 General factory overhead 51,550* Depreciation of equipment (no resale value) 19,000 Advertisingtraceable 51,350 Insurance on inventories 4,200 Purchasing department 30,?BDT Total fixed expenses 16?,110 Operating loss $(16,310) *Allocated on the basis of machine-hours. tAllocated on the basis of sales dollars. Discontinulng the knapsacks would not aect 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 line 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.) Difference: Keep School Drop School Operating Knapsack Knapsack Income Increase or (Decrease) Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Salary of product-line manager General factory overhead Depreciation of equipment Advertising-traceable Insurance on inventories Purchasing department Total fixed expenses Operating loss

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting

Authors: Charles T Horngren, Jr Walter T Harrison

2nd Edition

0135080193, 9780135080191

More Books

Students also viewed these Accounting questions

Question

Do the measurement items or tools have content relevance?

Answered: 1 week ago