arwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,482 per unit and then sells them to retail customers for an average price of $3,100 each. The company’s selling and administrative costs for a typical month are presented below: CostsCost FormulaSelling: Advertising$963 per monthSales salaries and commissions$4,816 per month, plus 3% of salesDelivery of pianos to customers$59 per piano soldUtilities$640 per monthDepreciation of sales facilities$5,100 per monthAdministrative: Executive salaries$13,519 per monthInsurance$704 per monthClerical$2,471 per month, plus $38 per piano soldDepreciation of office equipment$926 per month During August, Marwick’s Pianos, Inc., sold and delivered 58 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.

Financial Statement - It is formal records of the financial activities of particular period and…

Answered: arwick’s Pianos, Inc., purchases pianos…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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arwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,482 per unit and then sells them to retail customers for an average price of $3,100 each. The company’s selling and administrative costs for a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$	963 per month
Sales salaries and commissions	$	4,816 per month, plus 3% of sales
Delivery of pianos to customers	$	59 per piano sold
Utilities	$	640 per month
Depreciation of sales facilities	$	5,100 per month
Administrative:
Executive salaries	$	13,519 per month
Insurance	$	704 per month
Clerical	$	2,471 per month, plus $38 per piano sold
Depreciation of office equipment	$	926 per month

During August, Marwick’s Pianos, Inc., sold and delivered 58 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.

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