An income statement for Sam's Bookstore for the first quarter of the year is presented below: Sam's Bookstore
Income Statement
For Quarter Ended March 31
Sales $900,000
Cost of goods sold 630,000
Gross margin 270,000
Selling and administrative expenses $100,000
Selling 104,000
Administration 204,000
Net operating income $ 66,000
On average, a book sells for $50. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed.