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 $ 990,000
Cost of goods sold 675,000
Gross margin 315,000
Selling and administrative expenses Selling $ 109,000 Administration 122,000 231,000
Net operating income $ 84,000
On average, a book sells for $60. Variable selling expenses are $6 per book with the remaining selling expenses being fixed. The variable administrative expenses are 5% of sales with the remainder being fixed.
The contribution margin for Sam's Bookstore for the first quarter is:
Multiple Choice
$841,500
$216,000
$166,500
$823,500