Reference no: EM132803217
Question - The University Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2007 is presented below:
University Store Inc, Income Statement For the Quarter Ended March 31, 2007
Sales 800,000
Cost of Goods Sold 640,000
Gross Margin 160,000
Less Operating Expenses:
Selling 105,000
Administrative 35,000 140,000
Net Income 20,000
On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed.
Required -
1. Find the contribution margin for the University Store for the first quarter of 2007?
2. Find the net income computed using the contribution approach for the first quarter of 2007?
3 If 45,000 books are sold during the second quarter of 2007, find the company's contribution margin?