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 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 (no resale value) Advertising-traceable Insurance on inventories Purchasing department Total fixed expenses Operating loss *Allocated on the basis of machine-hours. Allocated on the basis of sales dollars. $79,800 31,350 8,550 11,000 56,800* 21,500 53,600 4,708 33,160¹ $285,000 119,700 165,300 180,760 $(15,460) 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.
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 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 (no resale value) Advertising-traceable Insurance on inventories Purchasing department Total fixed expenses Operating loss *Allocated on the basis of machine-hours. Allocated on the basis of sales dollars. $79,800 31,350 8,550 11,000 56,800* 21,500 53,600 4,708 33,160¹ $285,000 119,700 165,300 180,760 $(15,460) 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please Do not Give Image format
Transcribed Image Text: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
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 (no resale value)
Advertising-traceable
Insurance on inventories
Purchasing department
Total fixed expenses
Operating loss
*Allocated on the basis of machine-hours.
TAllocated on the basis of sales dollars.
$79,800
31,350
8,550
11,000
56,800*
21,500
53,600
4,708
33,160¹
$285,000
119,700
165.300
180,760
$(15,460)
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.
Transcribed Image Text: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.)
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
Keep School Drop School
Knapsack
Knapsack
O Yes
O No
$
0
0
0
0 $
Difference:
Operating
Income
Increase or
(Decrease)
0
0 $
b. Would you recommend that the Williams Products Inc line be discontinued?
0
0
0
0
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