The University Store, Inc. is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below:
On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder of the administrative expenses are fixed.
-The contribution margin for the University Store for the first quarter is:
A) $660,000
B) $700,000
C) $180,000
D) $140,000

Question

The University Store, Inc. is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below:
  On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder of the administrative expenses are fixed.
-The contribution margin for the University Store for the first quarter is:
A) $660,000 
B) $700,000 
C) $180,000 
D) $140,000

Quizplus · Accepted Answer

Unit sales = $800,000 ÷ $40 per book = 20,000 books
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