Marwick’s Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,519 per unit and then sells them to retail customers for an average price of $3,000 each. The company’s selling and administrative costs for a typical month are presented below: CostsCost FormulaSelling: Advertising$968 per monthSales salaries and commissions$4,783 per month, plus 5% of salesDelivery of pianos to customers$60 per piano soldUtilities$661 per monthDepreciation of sales facilities$5,069 per monthAdministrative: Executive salaries$13,430 per monthInsurance$696 per monthClerical$2,538 per month, plus $38 per piano soldDepreciation of office equipment$884 per month During August, Marwick’s Pianos, Incorporated, sold and delivered 59 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. Can you help me with this problem with step by step explanation, please? Thank you :)

preparation of traditional format income statement and contribution format income statement for…

Answered: Marwick’s Pianos, Incorporated,…

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, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,519 per unit and then sells them to retail customers for an average price of $3,000 each. The company’s selling and administrative costs for a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$968 per month
Sales salaries and commissions	$4,783 per month, plus 5% of sales
Delivery of pianos to customers	$60 per piano sold
Utilities	$661 per month
Depreciation of sales facilities	$5,069 per month
Administrative:
Executive salaries	$13,430 per month
Insurance	$696 per month
Clerical	$2,538 per month, plus $38 per piano sold
Depreciation of office equipment	$884 per month

During August, Marwick’s Pianos, Incorporated, sold and delivered 59 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.

Can you help me with this problem with step by step explanation, please? Thank you :)

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