Marwick’s Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,508 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 Cost Formula Selling: Advertising $ 961 per month Sales salaries and commissions $ 4,802 per month, plus 5% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 667 per month Depreciation of sales facilities $ 5,049 per month Administrative: Executive salaries $ 13,433 per month Insurance $ 696 per month Clerical $ 2,513 per month, plus $37 per piano sold Depreciation of office equipment $ 877 per month During August, Marwick’s Pianos, Incorporated, sold and delivered 55 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, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,508 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 Cost Formula Selling: Advertising $ 961 per month Sales salaries and commissions $ 4,802 per month, plus 5% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 667 per month Depreciation of sales facilities $ 5,049 per month Administrative: Executive salaries $ 13,433 per month Insurance $ 696 per month Clerical $ 2,513 per month, plus $37 per piano sold Depreciation of office equipment $ 877 per month During August, Marwick’s Pianos, Incorporated, sold and delivered 55 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Marwick’s Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,508 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 | Cost Formula | |
|---|---|---|
| Selling: | ||
| Advertising | $ 961 | per month |
| Sales salaries and commissions | $ 4,802 | per month, plus 5% of sales |
| Delivery of pianos to customers | $ 59 | per piano sold |
| Utilities | $ 667 | per month |
| $ 5,049 | per month | |
| Administrative: | ||
| Executive salaries | $ 13,433 | per month |
| Insurance | $ 696 | per month |
| Clerical | $ 2,513 | per month, plus $37 per piano sold |
| Depreciation of office equipment | $ 877 | per month |
During August, Marwick’s Pianos, Incorporated, sold and delivered 55 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:Required
Required 2
Prepare a traditional format income statement for August. (A "Net operating loss" should be entered as a negative number.)
Marwick's Pianos, Incorporated
Traditional Income Statement
For the Month of August
Selling and administrative expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total selling and administrative expenses
0
0
0
Transcribed Image Text:Marwick's Pianos, Incorporated
Contribution Format Income Statement
For the Month of August
Variable expenses:
Total variable expenses
Contribution margin
Fixed expenses:
Total fixed expenses
Total
0
0
Per Piano
0
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