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 $ 950,000 Cost of goods sold 650,000 Gross margin 300,000 Selling and administrative expenses Selling $ 104,000 Administration 112,000 216,000 Net operating income $ 84,000 On average, a book sells for $50. Variable selling expenses are $4 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed. The contribution margin for Sam's Bookstore for the first quarter is:___________.

Answer 1

Answer:

$495,500

Explanation:

First, we calculate the total number of books sold during the quarter.

950,000/50 = 19,000 books sold

Then we calculate variable selling and administrative expenses.

Variable Selling Expenses = 19,000 x 4 = $76,000

Variable Administrative Expenses = 950,000 x 3% = $28,500

Finally, we calculate contribution margin for the first quarter by deducting Cost of Goods Sold, Variable Selling Expenses and Variable Administrative Expenses from the Total Sales Value, as shown below:

950,000 - (350,000 + 76,000 + 28,500) = $495,500

The contribution margin for Sam's Bookstore for the first quarter is: $495,500

Answer 2

Answer:

$44.50

Explanation:

Selling Price                                          $50.00  

Variable selling expenses                  $4.00  

Variable administrative expenses  $1.50  

Contribution Margin                          $44.50