Reference: 06-12
an Income Statement for Crandall's Bookstore for the First

question 27

Multiple Choice

Reference: 06-12
An income statement for Crandall's Bookstore for the first quarter of the current year is presented below:
Crandall's Bookstore
Income Statement
For the First Quarter of the Current Year $$\begin{array} { | l | l | l | } \hline \text { Sales } & & \$ 800,000 \\\hline \text { Less cost of goods sold } & & { 560,000 } \\\hline \text { Gross margin } & &{ 240,000 } \\\hline \text { Less operating expenses: } & & \\\hline \text { Selling } & \$ 98,000 & \\\hline \text { Administrative } & 98,000 & \underline { 196,000 } \\\hline \text { Net income } & & \$ 44,000 \\\hline\end{array}$$ On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being fixed.
-The net income using the contribution approach for the first quarter is?

• A)$128,000.
• B)$152,000.
• C)$240,000.
• D)$44,000.

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Definitions:

Cretaceous Era

A geological epoch that lasted from about 145 to 66 million years ago, at the end of the Mesozoic Era, known for the extinction of dinosaurs.

Meteor Impact

The collision of a meteoroid with the Earth or another planet, causing effects ranging from craters to climate changes depending on the size and speed of the meteoroid.

Extinction

The process through which a species ceases to exist due to the death of its last remaining members.

Dinosaurs

A diverse group of prehistoric reptiles that lived during the Mesozoic Era, now extinct.