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			$	910,000
Cost of goods sold				530,000
Gross margin				380,000
Selling and administrative expenses
Selling	$	113,000
Administration		130,000		243,000
Net operating income			$	137,000

On average, a book sells for $70. Variable selling expenses are $5 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: