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

question 104

Multiple Choice

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
$\begin{array}{|l|r|r|}\hline \text { Sales } && \$ 800,000 \\\hline \begin{array}{l}\text { Less: Cost of Goods Sold - } \\\text { all variable }\end{array} && \underline{560,000} \\\hline \text { Gross Margin } & & 240,000 \\\hline \text { Less: Operating Expenses: } & & \\\hline \text { Selling } & \$ 98,000 & \\\hline \text { Administrative } & 98,000 & \underline{196,000} \\\hline \text { Operating Income } & & \underline{\$ 44,000} \\\hline\end{array}$ 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.


-What is the contribution margin for Crandall's Bookstore for the first quarter?

• A) $128,000.
• B) $152,000.
• C) $240,000.
• D) $688,000.

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Definitions:

Long-Run Phillips Curve

An economic concept stating that in the long run, there is no trade-off between inflation and unemployment, depicted as a vertical line at the natural rate of unemployment.

Fiscal Policy

Fiscal policy involves government spending and taxation to influence the economy.

Inflation Rate

The percentage increase in the price level of goods and services over a period of time.

Unemployment Compensation

Financial payments made to individuals who have lost their jobs, provided by the government or other authorized bodies to support them while they search for new employment.