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:
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 net operating income computed using the contribution approach for the first quarter is:
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