The income statement for Calvin's Martial Arts Company for the first quarter of the year is shown below:

Calvin's Martial Arts Company
Income Statement
For Quarter Ended March 31
Sales			$	900,000
Cost of goods sold				635,000
Gross margin				265,000
Selling and administrative expenses
Selling	$	101,000
Administration		106,000		207,000
Net operating income			$	58,000

On average, a Martial Arts Membership sells for $60. Variable selling expenses are $5 per membership with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed.

The contribution margin for the Martial Arts Company for the first quarter is:

Multiple Choice

• $737,000

• $163,000

• $798,000

• $190,000