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:

$*$Allocated on the basis of machine$-$hours.

${}_{\text{A}\text{l}\text{l}\text{o}\text{c}\text{a}\text{t}\text{e}\text{d}on\text{t}\text{h}\text{e}\text{b}\text{a}\text{s}\text{i}\text{s}of\text{s}\text{a}\text{l}\text{e}\text{s}\text{d}\text{o}\text{l}\text{l}\text{a}\text{r}\text{s}\text{.}}$

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.$)$

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