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 Statement For the Quarter Ended March 31 Sales $ 800,000 Cost of goods sold 560,000 Gross margin 240,000 Selling and administrative expenses Selling $ 100,000 Administration 110,000 210,000 Net 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. The net operating income computed using the contribution approach for the first quarter is: a. $30,000 b. $180,000 c. $140,000 d. $0In a job-order costing system, the use of indirect materials that have been used for producti recorded to: A) Work in Process inventory: B) Finished Goods inventory. C) Raw Materials inventory. D) Manufacturing Overhead.

Question

Business

Kent

23 July, 17:14

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 Statement For the Quarter Ended March 31 Sales $ 800,000 Cost of goods sold 560,000 Gross margin 240,000 Selling and administrative expenses Selling $ 100,000 Administration 110,000 210,000 Net 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. The net operating income computed using the contribution approach for the first quarter is: a. $30,000 b. $180,000 c. $140,000 d. $0In a job-order costing system, the use of indirect materials that have been used for producti recorded to: A) Work in Process inventory: B) Finished Goods inventory. C) Raw Materials inventory. D) Manufacturing Overhead.

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Answers (1)

Know the Answer?

Aron Porter · Answer 1

c. $140,000

D) Manufacturing Overhead.

Explanation:

800,000 / 40 = 20,000 books sold

variable cost per book:

$3 selling + 5% of the sale as adminsitrative cost =

3 + 40 x 0.05 = 5

5 x 20,000 = 100,000 variable cost

total variable cost:

560,000 + 100,000 variable selling and administrative = 660,000

800,000 sales revenue

- 660,000 variable cost

140,000 contribution margin

Q2:

The indirect materials will be cahrge agains t the debit of manufacturing overhead to latter define the amount under-over applied