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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 | $ 930,000 | |
---|---|---|
Cost of goods sold | 655,000 | |
Gross margin | 275,000 | |
Selling and administrative expenses | ||
Selling | $ 105,000 | |
Administrative | 114,000 | 219,000 |
Net operating income | $ 56,000 |
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 net operating income using the contribution approach for the first quarter is:
Multiple Choice
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$275,000
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$197,500
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$56,000
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$160,300
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