Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,513 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 Cost Formula $952 per month $4,774 per month, plus 4% of sales $59 per piano sold $664 per month $5,017 per month Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 59 pianos. $13,430 per month $683 per month $2,526 per month, plus $38 per piano sold $856 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.
Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,513 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 Cost Formula $952 per month $4,774 per month, plus 4% of sales $59 per piano sold $664 per month $5,017 per month Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 59 pianos. $13,430 per month $683 per month $2,526 per month, plus $38 per piano sold $856 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 1-21 (Algo) Traditional and Contribution Format Income Statements [LO1-6]
Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,513 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:
Cost Formula
$952 per month
$4,774 per month, plus 4% of sales
$59 per piano sold
$664 per month
$5,017 per month
Executive salaries.
Insurance
Clerical
Depreciation of office equipment
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.
$13,430 per month
$683 per month
$2,526 per month, plus $38 per piano sold
$856 per month
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Prepare a traditional format income statement for August.
Note: A "Net operating loss" should be entered as a negative number.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9737efd-391f-457a-98f6-aa044a0527f1%2Fd8eefa7e-17e3-4aa0-9074-1cdaa4ba1495%2F24a3n88_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 1-21 (Algo) Traditional and Contribution Format Income Statements [LO1-6]
Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,513 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:
Cost Formula
$952 per month
$4,774 per month, plus 4% of sales
$59 per piano sold
$664 per month
$5,017 per month
Executive salaries.
Insurance
Clerical
Depreciation of office equipment
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.
$13,430 per month
$683 per month
$2,526 per month, plus $38 per piano sold
$856 per month
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Prepare a traditional format income statement for August.
Note: A "Net operating loss" should be entered as a negative number.
Transcribed Image Text:Prepare a traditional format income statement for August.
Note: A "Net operating loss" should be entered as a negative number.
Marwick's Pianos, Incorporated
Traditional Income Statement
For the Month of August
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses:
Advertising
Sales salaries and commissions
Delivery of pianos
Utilities
Depreciation of sales facilities
Total selling expenses
Administrative expenses:
Executive salaries
Insurance
Clerical
Depreciation of office equipment
Total administrative expenses
Total selling and administrative expenses
Net operating income
$
952
11,382
3,481
664
5,017
21,496
13,430
683
4,768
856
19,737
$ 165,200
89,267
75,933
$
41,233
34,700
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