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: