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: $280,000 117,600 WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 Sales Variable expenses: Variable manufacturing expenses $78,400 Sales commissions 30,800 Shipping 8,400 Total variable expenses Contribution margin Fixed expenses: Salary of product-line manager 10,750 General factory overhead 55,750* Depreciation of equipment (no resale value) 21,000 Advertising-traceable 53,250 Insurance on inventories 4,600 Purchasing department 32,6801 Total fixed expenses Operating loss 162,400 178,030 $(15,630) *Allocated on the basis of machine-hours. Allocated 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 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.) Keep School Drop School Knapsack Knapsack Difference: Operating 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