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23 April, 13:50

TB MC Qu. 1-254 An income statement for Sam's Bookstore for ... An income statement for Sam's Bookstore for the first quarter of the year is presented below: Sam's Bookstore Income Statement For Quarter Ended March 31 Sales $ 900,000 Cost of goods sold 635,000 Gross margin 265,000 Selling and administrative expenses Selling $ 101,000 Administration 106,000 207,000 Net operating income $ 58,000 On average, a book sells for $60. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed. The net operating income using the contribution approach for the first quarter is:

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  1. 23 April, 13:52
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    Net operating income $ 58,000

    Explanation:

    Sam's Bookstore

    Income Statement

    For Quarter Ended March 31

    Sales $ 900,000

    Variable Selling Expenses $ 75,000 (15000*5)

    Variable Administrative Expenses $ 27000 (3% 0f $ 900,000)

    Contribution Margin 798,000

    Less Fixed Expenses

    Less COGS 635,000 (all taken fixed)

    Selling and administrative expenses 105,000 (207,000 - 102,000)

    Net operating income $ 58,000

    Sam's Bookstore

    Income Statement

    For Quarter Ended March 31

    Sales $ 900,000

    Cost of goods sold 635,000

    Gross margin 265,000

    Selling and administrative expenses 207,000

    Selling $ 101,000

    Administration 106,000

    Net operating income $ 58,000

    Working: No of units = Total Sales / Unit Cost = $ 900,000 / $ 60 = 15,000
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