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 StatementSchool Knapsacks
For the Quarter Ended June 30
Sales				$	285,000
Variable expenses:
Variable manufacturing expenses	$	79,800
Sales commissions		31,350
Shipping		8,550
Total variable expenses					119,700
Contribution margin					165,300
Fixed expenses:
Salary of product-line manager		11,000
General factory overhead		56,800	*
Depreciation of equipment (no resale value)		21,500
Advertisingtraceable		53,600
Insurance on inventories		4,700
Purchasing department		33,160
Total fixed expenses					180,760
Operating loss				$	(15,460	)

*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 companys 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.)

b. Would you recommend that the Williams Products Inc line be discontinued?

• Yes

• No