An Income Statement for Sam's Bookstore for the First Quarter

question 125

Multiple Choice

An income statement for Sam's Bookstore for the first quarter of the year is presented below: 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.
If 20,000 books are sold during the second quarter and this activity is within the relevant range, the company's expected contribution margin would be:

• A) $300,000
• B) $160,000
• C) $860,000
• D) $58,000

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Definitions:

Escape Strategy

A plan developed by individuals or organizations to withdraw from a situation or commitment in a methodical way.

Union Decertification

The process through which workers remove the representation of a labor union in their workplace through an official vote.

Nonunion Site

This defines a workplace where the employees are not organized into a labor union for collective bargaining with their employer.

Subcontracting

The practice of a company hiring another company to perform tasks, handle operations or provide services that are either difficult to manage or are outside the company's expertise.