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

question 78

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 $65. 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 cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

• A) Y = $116,300 + $4.00X
• B) Y = $116,300 + $5.95X
• C) Y = $177,700 + $5.95X
• D) Y = $177,700 + $7.90X

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Definitions:

Relevant Inputs

Factors or resources that directly impact the production process or decision-making in a specific context.

Decreasing-cost Industry

An industry where the cost per unit of output decreases as the scale of production increases.

Long-run Equilibrium Price

The price level at which the quantity supplied equals the quantity demanded, achieved over a period where all inputs can be varied by producers.

Increase in Demand

A situation where there is a rise in consumers' desire to purchase goods or services, leading to higher quantity demanded at every price level.