The University Store, Inc. is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below: University Store, Inc.Income StatementFor the Quarter Ended March 31Sales $800,000Cost of goods sold 560,000Gross margin 240,000Selling and administrative expenses Selling$100,000 Administrative 110,000 210,000Net 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. 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:
A. $300,000
B. $175,000
C. $875,000
D. $65,000
Answer: B
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