Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells them to retail customers for an average price of $3,400 each. The company’s selling and administrative costs for a typical month are presented below: CostsCost FormulaSelling: Advertising$948 per monthSales salaries and commissions$4,782 per month, plus 4% of salesDelivery of pianos to customers$57 per piano soldUtilities$664 per monthDepreciation of sales facilities$4,905 per monthAdministrative: Executive salaries$13,450 per monthInsurance$704 per monthClerical$2,469 per month, plus $44 per piano soldDepreciation of office equipment$928 per month During August, Marwick’s Pianos, Inc., sold and delivered 61 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.

1. Prepare a traditional format income statement for August as shown below:

Answered: Marwick’s Pianos, Inc., purchases…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells them to retail customers for an average price of $3,400 each. The company’s selling and administrative costs for a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$	948 per month
Sales salaries and commissions	$	4,782 per month, plus 4% of sales
Delivery of pianos to customers	$	57 per piano sold
Utilities	$	664 per month
Depreciation of sales facilities	$	4,905 per month
Administrative:
Executive salaries	$	13,450 per month
Insurance	$	704 per month
Clerical	$	2,469 per month, plus $44 per piano sold
Depreciation of office equipment	$	928 per month

During August, Marwick’s Pianos, Inc., sold and delivered 61 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.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions