The University Store, Inc

question 2

Multiple Choice

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.
-If 25,000 books are sold during the second quarter and this activity is within the relevant range,the company's expected contribution margin would be:

• A) $875,000
• B) $300,000
• C) $175,000
• D) $65,000