An income statement for Sam's Bookstore for the first quarter of the year is presented below: Sam's BookstoreIncome StatementFor Quarter Ended March 31Sales $850,000Cost of goods sold 535,000Gross margin 315,000Selling and administrative expenses Selling$114,000 Administration 132,000 246,000Net operating income $69,000 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 contribution margin for Sam's Bookstore for the first quarter is:

Answered: he contribution margin for Sam's…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

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			$	850,000
Cost of goods sold				535,000
Gross margin				315,000
Selling and administrative expenses
Selling	$	114,000
Administration		132,000		246,000
Net operating income			$	69,000

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 contribution margin for Sam's Bookstore for the first quarter is:

Expert Solution

Step 1

Contribution margin:

Contribution is the excess of sales price over the variable expenses incurred by the company. It is used for calculating the breakeven point and also reflects the amount remaining to be used by fixed expenses.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions