Problem IV. The U Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2020 is presented below: Sales 800,000Cost of Goods Sold 560,000Gross Margin 240,000Less: Operating Expenses Selling Expenses105,000 Administrative Expenses105,000210,000Net Income 30,000 On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed. 3. The cost formula for operating expenses with “x” equal the number of books sold is:

Operating expense = (Variable selling + variable administration expense) X + ( selling expense +…

Answered: The U Store, Inc. is the major supplier…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem IV. The U Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2020 is presented below:

Sales		800,000
Cost of Goods Sold		560,000
Gross Margin		240,000
Less: Operating Expenses
Selling Expenses	105,000
Administrative Expenses	105,000	210,000
Net Income		30,000

On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed.

3. The cost formula for operating expenses with “x” equal the number of books sold is:

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