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 Statement-School Knapsacks For the Quarter Ended June 30 Sales $225,000 Variable expenses: Variable manufacturing expenses. $65,000 Sales commissions. Shipping.. 24,000 6,000 Total variable expenses.. 95,000 Contribution margin. 130,000 Fixed expenses: Salary of product-line manager. 10,500 General factory overhead. 52,000* Depreciation of equipment (no resale value). 18,000 Advertising-traceable. 55,000 Insurance on inventories. 4,500 Purchasing department. 25,000* Total fixed expenses. 165,000 Operating loss $(35,000) *Allocated on the basis of machine-hours. Allocated on the basis of colos dollars