Question

114 points) A traditional income statement for Sam's Bookstore, a retailer of textbooks, for April is presented below. $900,000 630,000 270,000 Sales Cost of Goods Sold Gross Profit Less Operating Expenses Selling Administration Operating Income 100,000 104,000 204,000 $66,000 Books sell for $50.00 each. Variable selling expenses are $5.00 per book with the remaining selling expenses being fixed. Administrative expenses are 20% fixed. Prepare a contribution margin income statement in good form for the month of April.

Answer 1

Correct Answer:

Sam’s bookstore
Contribution margin Income statement
sales		$ 900,000.00
Less: variable cost
Cost of goods sold	$   630,000.00
variable selling expenses (5*18000 units)	$      90,000.00
Variable administrative expenses (80% *104000)	$      83,200.00
Total variable costs		$ 803,200.00
Contribution margin		$   96,800.00
Less: Fixed cost
Fixed selling expenses (100,000-90,000)	$      10,000.00
Fixed Administrative expense (20% * 104000)	$      20,800.00
Total fixed cost		$   30,800.00
Operating income		$   66,000.00

End of answer.

Please give a thumbs-up, it will be highly appreciated.

Thanks.