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		$ 850,000
Cost of goods sold		535,000
Gross margin		315,000
Selling and administrative expenses
Selling	$ 114,000
Administrative	132,000	246,000
Net operating income		$ 69,000

On average, a book sells for $50. 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 cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

• Y = $127,000 + $9.00X

• Y = $127,000 + $7.00X

• Y = $103,000 + $5.00X

• Y = $103,000 + $7.00X