An income statement for Crandall's Bookstore for the first quarter of the current year is presented below:

On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being fixed.
-What is the cost formula for operating expenses with X equal to the number of books sold?
A) Y = $84,000 + $7.00X.
B) Y = $84,000 + $8.50X.
C) Y = $98,000 + $7.00X.
D) Y = $98,000 + $8.50X.

Question

An income statement for Crandall's Bookstore for the first quarter of the current year is presented below:

On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being fixed.
-What is the cost formula for operating expenses with X equal to the number of books sold?
A) Y = $84,000 + $7.00X. 
B) Y = $84,000 + $8.50X. 
C) Y = $98,000 + $7.00X. 
D) Y = $98,000 + $8.50X.

Quizplus · Accepted Answer

The cost formula for operating expenses is typically structured as a fixed cost plus a variable cost per unit. Here, $84,000 is the fixed cost, and $7.00 is the variable cost per book sold, making option A the correct formula.

An Income Statement for Crandall's Bookstore for the First Quarter