Answer:
The contribution margin for Sam's Bookstore for the first quarter is $163,000.
Explanation:
The contribution margin is the sales minus total variable cost. This can be calculated as follows:
Units of books sold = Sales / Selling price per book = $900,000 / $60 = 15,000
Variable selling expenses = Units of books sold * Variable selling expenses per book = 15,000 * $5 = $75,000
Variable administrative expenses = Sales * 3% = $900,000 * 3% = $27,000
Total variable cost = Cost of goods sold + Variable selling expenses + Variable administrative expenses = $635,000 + $75,000 + $27,000 = $737,000
Contribution margin = Sales - Total variable cost = $900,000 - $737,000 = $163,000
Therefore, the contribution margin for Sam's Bookstore for the first quarter is $163,000.
