Contribution Margin for Sams Bookstore Assignment – Top Universities
April 16th, 2021
An income statement for Sam's Bookstore for the first quarter of the year is presented below:
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| Sam's Bookstore | ||||
| Income Statement | ||||
| For Quarter Ended March 31 | ||||
| Sales | $ | 840,000 | ||
| Cost of goods sold | 545,000 | |||
| Gross margin | 295,000 | |||
| Selling and administrative expenses | ||||
| Selling | $ | 116,000 | ||
| Administration | 136,000 | 252,000 | ||
| Net operating income | $ | 43,000 | ||
On average, a book sells for $60. 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:
- $626,200
- $239,000
- $213,800
- $758,800.
