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			$	900,000
Cost of goods sold				630,000
Gross margin				270,000
Selling and administrative expenses
Selling	$	100,000
Administration		104,000		204,000
Net operating income			$	66,000

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:

Multiple Choice

• Y = $78,000 + $7X

• Y = $102,000 + $5X

• Y = $78,000 + $9X

• Y = $102,000 + $7X