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