Marwick's Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,502 per unit and then sells them to retail customers for an average price of $2,400 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 Cost Formula $944 per month $4,810 per month, plus 5% of sales $61 per piano sold $638 per month $4,920 per month Depreciation of sales facilities Administrative: Executive salaries. Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 64 pianos. $13,534 per month $685 per month $2,492 per month, plus $39 per piano sold $945 per month 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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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Marwick's Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,502 per unit and then sells them
to retail customers for an average price of $2,400 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
Cost Formula
$944 per month
$4,810 per month, plus 5% of sales
$61 per piano sold
$638 per month
$4,920 per month
Depreciation of sales facilities
Administrative:
Executive salaries
Insurance
Clerical
Depreciation of office equipment
During August, Marwick's Pianos, Incorporated, sold and delivered 64 pianos.
$13,534 per month
$685 per month
$2,492 per month, plus $39 per piano sold
$945 per month
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, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,502 per unit and then sells them to retail customers for an average price of $2,400 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 Cost Formula $944 per month $4,810 per month, plus 5% of sales $61 per piano sold $638 per month $4,920 per month Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 64 pianos. $13,534 per month $685 per month $2,492 per month, plus $39 per piano sold $945 per month 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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