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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
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 | $ | 1,000,000 | ||
Cost of goods sold | 665,000 | |||
Gross margin | 335,000 | |||
Selling and administrative expenses | ||||
Selling | $ | 107,000 | ||
Administration | 118,000 | 225,000 | ||
Net operating income | $ | 110,000 | ||
On average, a book sells for $50. Variable selling expenses are $4 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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