Question

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $2,450 per unit and then sells them to retail customers for an average price of $3,125 each. The company's selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $700 per month. Sales salaries and commissions $950 per month, plus 8\% of sales Delivery of pianos to customers $30 per piano sold Utilities $350 per month Depreciation of sales facilities $800 per month Administrative: Executive salaries $2,500 per month Insurance $400 per month Clerical $1,000 per month, plus $20 per piano sold Depreciation of office equipment $300 per month During August, Marwick's Pianos, Inc., sold and delivered 40 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.

          Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $2,450 per unit and then sells them to retail
customers for an average price of $3,125 each. The company's selling and administrative costs for a typical month are presented
below:
Costs
Cost Formula
Selling:
Advertising
$700 per month.
Sales salaries and commissions
$950 per month, plus 8\% of sales
Delivery of pianos to customers
$30 per piano sold
Utilities
$350 per month
Depreciation of sales facilities
$800 per month
Administrative:
Executive salaries
$2,500 per month
Insurance
$400 per month
Clerical
$1,000 per month, plus $20 per piano sold
Depreciation of office equipment
$300 per month
During August, Marwick's Pianos, Inc., sold and delivered 40 pianos.
Required:
1. Prepare a traditional format income statement for August.
2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down
through contribution margin.

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of 2,450 per unit and then sells them to retail
customers for an average price of3,125 each. The company's selling and administrative costs for a typical month are presented
below:
Costs
Cost Formula
Selling:
Advertising
700 per month.
Sales salaries and commissions950 per month, plus 8% of sales
Delivery of pianos to customers
30 per piano sold
Utilities350 per month
Depreciation of sales facilities
800 per month
Administrative:
Executive salaries2,500 per month
Insurance
400 per month
Clerical1,000 per month, plus 20 per piano sold
Depreciation of office equipment300 per month
During August, Marwick's Pianos, Inc., sold and delivered 40 pianos.
Required:
1. Prepare a traditional format income statement for August.
2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down
through contribution margin.

Added by Paul B.

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