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Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,503 per unit and then sells them to retail customers for an average price of $2,800 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment Cost Formula $965 per month $4,819 per month, plus 5% of sales $58 per piano sold $643 per month $4,929 per month $13,459 per month $694 per month $2,491 per month, plus $42 per piano sold $857 per month During August, Marwick's Pianos, Inc., sold and delivered 60 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 $1,503 per unit and then sells them to retail customers for an average price of $2,800 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment Cost Formula $965 per month $4,819 per month, plus 5% of sales $58 per piano sold $643 per month $4,929 per month $13,459 per month $694 per month $2,491 per month, plus $42 per piano sold $857 per month During August, Marwick's Pianos, Inc., sold and delivered 60 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 ACCOUNTING
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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Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,503 per unit and then sells them to retail customers for an average price of $2,800 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities. Administrative: Executive salaries. Insurance Clerical Depreciation of office equipment Cost Formula $965 per month $4,819 per month, plus 5% of sales $58 per piano sold $643 per month $4,929 per month. $13,459 per month $694 per month. $2,491 per month, plus $42 per piano sold $857 per month During August, Marwick's Pianos, Inc., sold and delivered 60 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.
Transcribed Image Text:Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,503 per unit and then sells them to retail customers for an average price of $2,800 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities. Administrative: Executive salaries. Insurance Clerical Depreciation of office equipment Cost Formula $965 per month $4,819 per month, plus 5% of sales $58 per piano sold $643 per month $4,929 per month. $13,459 per month $694 per month. $2,491 per month, plus $42 per piano sold $857 per month During August, Marwick's Pianos, Inc., sold and delivered 60 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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