An income statement for Sam's Bookstore for the first quarter of the year is presented below:

Sam's BookstoreIncome StatementFor 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

Administrative 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 contribution margin for Sam's Bookstore for the first quarter is: