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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: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 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 ences "Allocated on the basis of machine-hours. TAllocated on the basis of sales dollars. $65,800 25,850 7,050 8,500 46,300 16,000 50, 100 3,700 28,3601 $235,000 98,700 136,300 152,960 $(16,660) 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 indi minus sign)

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: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 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 ences "Allocated on the basis of machine-hours. TAllocated on the basis of sales dollars. $65,800 25,850 7,050 8,500 46,300 16,000 50, 100 3,700 28,3601 $235,000 98,700 136,300 152,960 $(16,660) 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 indi minus sign)

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...
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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: 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 rences WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 "Allocated on the basis of machine-hours. TAllocated on the basis of sales dollars. 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 $65,800 25,850 7,050 8,500 46,300* 16,000 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. Keep School Drop School Knapsack Knapsack 50, 100 3,700 28,3601 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.) $235,000 98,700 136,300 152,960 $(16,660) Difference: Operating Income Increase or (Decrease)
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: 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 rences WILLIAMS PRODUCTS INC. Income Statement-School Knapsacks For the Quarter Ended June 30 "Allocated on the basis of machine-hours. TAllocated on the basis of sales dollars. 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 $65,800 25,850 7,050 8,500 46,300* 16,000 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. Keep School Drop School Knapsack Knapsack 50, 100 3,700 28,3601 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.) $235,000 98,700 136,300 152,960 $(16,660) Difference: Operating Income Increase or (Decrease)
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