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.
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:
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