8. House of Furniture, Inc., purchases from a well known manufacturer and sells them at the retail level. Each set is sold at the rate of $2,500. The average cost of each set of furniture from the manufacturer is $1,500. The costs that the company incurs in a month are presented below: Cost Selling Costs Advertising $950 per month Delivery expenses $60 per set sold Salaries and commission $4,800 per month, plus 4% of sales Depreciation of sales facilities $5,000 per month Other selling expenses $650 per month Administrative Costs Executive salary $13,500 per month Depreciation of office equipment $900 per month Clerical expenses $2,500 per month plus $40 per set sold Insurance $700 per month During November, the company sold and delivered 60 furniture sets. Required: a. Prepare a traditional income statement for November b. Prepare a contribution format income statement. Show costs and revenues on both a total and a per unit basis down through contribution margin.

8. House of Furniture, Inc., purchases from a well known manufacturer and sells them at the retail level. Each set is sold at the rate of $2,500. The average cost of each set of furniture from the manufacturer is $1,500. The costs that the company incurs in a month are presented below: Cost Selling Costs Advertising $950 per month Delivery expenses $60 per set sold Salaries and commission $4,800 per month, plus 4% of sales Depreciation of sales facilities $5,000 per month Other selling expenses $650 per month Administrative Costs Executive salary $13,500 per month Depreciation of office equipment $900 per month Clerical expenses $2,500 per month plus $40 per set sold Insurance $700 per month During November, the company sold and delivered 60 furniture sets. Required: a. Prepare a traditional income statement for November b. Prepare a contribution format income statement. Show costs and revenues on both a total and a per unit basis down through contribution margin.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. Thepianos cost, on the average, $2,450 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianosto its customers at an average price of $3,125 each. The selling and administrative costs that the companyincurs in a typical month are presented below:Costs Cost FormulaSelling:Advertising ................................................ $700 per monthSales salaries and commissions .............. $950 per month, plus 8% of salesDelivery of pianos to customers ............... $30 per piano soldUtilities ...................................................... $350 per monthDepreciation of sales facilities .................. $800 per monthAdministrative:Executive salaries .................................... $2,500 per monthInsurance .................................................. $400 per monthClerical ..................................................... $1,000 per month, plus…
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