Question
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
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 - all variable | 560,000 | |
Gross Margin | 240,000 | |
Less: Operating Expenses: | ||
Selling | $98,000 | |
Administrative | 98,000 | 196,000 |
Operating 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.
What is the cost formula for operating expenses where X represents the number of books sold?
Multiple Choice
-
Y = $84,000 + $7.00X.
-
Y = $98,000 + $8.50X.
-
Y = $98,000 + $7.00X.
-
Y = $84,000 + $8.50X.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started