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 565,000

Gross margin 345,000

Selling/administrative expense

Selling $ 120,000

Administrative 144,000

Total expense 264,000

Net operating income $ 81,000

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 4% of sales with the remainder being fixed.

The net operating income using the contribution approach for the first quarter is:

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