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 $ 960,000 Cost of goods sold 670,000 Gross margin 290,000 Selling and administrative expenses Selling $ 108,000 Administration 120,000 228,000 Net operating income $ 62,000 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 4% of sales with the remainder being fixed. The cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

Question

Hadassah Reeves

Business

20 February, 16:39

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 $ 960,000 Cost of goods sold 670,000 Gross margin 290,000 Selling and administrative expenses Selling $ 108,000 Administration 120,000 228,000 Net operating income $ 62,000 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 4% of sales with the remainder being fixed. The cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

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Kevin Ritter · Answer 1

Answer: The net operating income used in contribution approach the first quarter is 171600

Explanation:

Description Amount Amount

Sales 960000

Variable expenses:

Cost of good sold 670000

Variable selling 80000

(5 per book*16000 books)

Variable administrative 38400

(960000*4%)

Total variables expenses 788400

contribution margin 171600

working note:

unit sales=960000/60 per book=16000 book