An income statement for Crandall's Bookstore for the first quarter of the current year is presented below:

Crandall's Bookstore

Income Statement

For the First Quarter of the Current Year

Sales ...................... $800,000

Less cost of goods sold .... 560,000

Gross margin ............... 240,000

Less operating expenses:

Selling ................. $98,000

Administrative .......... 98,000 196,000

Net income ................. $ 44,000

On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being fixed. The cost formula for operating expenses with "X" equal to the number of books sold is:

A. Y = $84,000 + $7.00X. C. Y = $98,000 + $7.00X.

B. Y = $84,000 + $8.50X. D. Y = $98,000 + $8.50X