An income statement for Sam's Bookstore for the first quarter of the year is presented below:Sam's BookstoreIncome StatementFor Quarter Ended March 31Sales $950,000?Cost of goods sold 650,000?Gross margin 300,000?Selling and administrative expenses Selling$104,000? Administration 112,000? 216,000?Net operating income $84,000?? On average, a book sells for $50. Variable selling expenses are $4 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed.The net operating income using the contribution approach for the first quarter is:
A. $224,000
B. $300,000
C. $84,000
D. $195,500
Answer: C
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