Williams Products Inc manufactures and sells a number of items
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:
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.
Would you recommend that the company discontinue the manufacture and sale of school knapsacks? Support your answer with appropriate computations.
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