Biology Forums - Study Force

The University Store, Incorporated is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below:

University Store, Incorporated
Income Statement
For the Quarter Ended March 31
Sales		$ 800,000
Cost of goods sold		560,000
Gross margin		240,000
Selling and administrative expenses
Selling	$ 100,000
Administrative	110,000	210,000
Net operating income		$ 30,000

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.

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

▸ Y = $105,000 + $3X

▸ Y = $105,000 + $5X

▸ Y = $110,000 + $5X

▸ Y = $110,000 + $33X

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