The accountant of a local retailer prepared the following income statement for this month:
Sales revenue $600,000
Cost of goods sold $250,000
Gross margin $350,000
Less operating expenses
Selling expense $73,000
Administrative expense $65,000 $138,000
Net operating income $212,000
The retailer sells its coats for $150 each. Selling expenses consist of a commission of $5 per coat plus fixed costs. Each coat costs $62.50 from the distributor. Administrative expenses consist of a variable component equal to 5% of sales plus fixed costs. In order to increase net operating income in the coming year, management is considering increasing advertising expenses.
What would be the total contribution margin reported on this retailer's contribution format income statement?
$550,000
$350,000
$212,000
$300,000