Question

ILIUL AV M mera. Google Docs A SHOP ALL-Are Y La Aesop a Nexander A Acne Studios - S M M Reader 1- Chap 1, 2 0 Help Save & Exit Submit An Income statement for Sam's Bookstore for the first quarter of the year is presented below: 00:40:05 Sam's Bookstore Income Statement For Quarter Ended March 31 Sales $840,000 Cost of goods sold 525,000 Gross margin 315,000 Selling and administrative expenses Selling $112,000 Administration 128,000 240,000 Net operating income $ 75,000 On average, a book sells for $60. Variable selling expenses are $6 per book with the remaining selling expenses being fixed. The variable administrative expenses are 5% of sales with the remainder being fixed. The contribution margin for Sam's Bookstore for the first quarter is:

how to solve this？

Answer 1

Number of units sold= $840000/60= 14000 units

Sales		$840000
Less: Variable expenses
Cost of goods sold	525000
Variable selling expenses (14000*$6)	84000
Variable administration expenses ($840000*5%)	42000
Total variable expenses		651000
Contribution margin		$189000

Contribution margin for Sam's Bookstore for the first =$189000