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				640,000
Gross margin				260,000
Selling and administrative expenses
Selling	$	102,000
Administration		108,000		210,000
Net operating income			$	50,000

On average, a book sells for $60. 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:

• $185,000

• $260,000

• $149,000

• $50,000