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 $1,508 per unit and then sells them toretail customers for an average price of $3,100 each. The company's selling and administrative costs for a typical month are presentedbelow:CostsSelling:AdvertisingSales salaries and commissionsDelivery of pianos to customersUtilitiesDepreciation of sales facilitiesAdministrative:Cost Formula$937 per month$4,819 per month, plus 3% of sales$62 per piano sold$638 per month$5,010 per month$13,471 per month$682 per month$2,465 per month, plus $36 per piano sold$944 per monthExecutive salariesInsuranceClericalDepreciation of office equipmentDuring August, Marwick's Pianos, Incorporated, sold and delivered 58 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 downthrough contribution margin.

Income statement:Income statement can be prepared by using two methods, traditional…

Answered: Problem 1-21 (Algo) Traditional and…

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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Income Statements Segmented by TerritoryScript, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC.Product Line and Company Income StatementsFor Month of September Pens Pencils Total Sales $25,000 $30,000 $55,000 Less variable expenses (10,000) (12,000) (22,000) Contribution margin 15,000 18,000 33,000 Less direct fixed expenses (8,000) (6,000) (14,000) Product margin $7,000 $12,000 $19,000 Less common fixed expenses (6,000) Net income $13,000 Pens and pencils are sold in two territories, Florida and Alabama, as follows: Florida Alabama Pen sales $11,000 $14,000 Pencil sales 13,000 17,000 Total sales $24,000 $31,000 The preceding common fixed expenses are traceable to each territory as follows: Florida fixed expenses $2,000 Alabama fixed expenses 3,000 Home office administration fixed expenses 1,000 Total common fixed expenses $6,000 The…
Applying Differential Analysis to Profitability Scenarios Assume that Company A and Company B sell a microwave popcorn popper for $20. Although the companies have different cost structures, both companies currently show a profit of $21,000 based on sales of 14,000 units as shown in the following financial statements for the month of June. Both companies hold no inventory and sell contractual orders in the month. For the Month of June Company A Company B Sales ($20) $280,000 $280,000 Variable cost of goods sold ($5.00, 7.50, Company A and B, respectively) 70,000 105,000 Variable selling and administrative costs ($2.00, $4.00, Company A and B, respectively) 28,000 56,000 Contribution margin 182,000 119,000 Fixed cost of goods sold 105,000 70,000 Fixed selling and administrative costs 56,000 28,000 Profits Before-Tax $21,000 $21,000 For each company, determine the impact on monthly profit using differential analysis for each of the following separate scenarios.1.…
Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $31.00 18.00 $ 13.00 Sales (8,600 units) Variable expenses Contribution, margin Fixed expenses Net operating income Total $ 266,600 154,800 111,800 Required: (Consider each case independently): 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income 56,000 $ 55,800 1. What would be the revised net operating income per month if the sales volume increases by 90 units? 2. What would be the revised net operating income per month if the sales volume decreases by 90 units? 3. What would be the revised net operating income per month if the sales volume is.7,600 units?
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Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON Co. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,600 units at $300 each) Variable costs (10,600 units at $240 each) Contribution margin $3,180,000 2,544,000 636,000 480,000 Fixed costs Pretax income 156,000 1. Assume Hudson Co. has a target pretax income of $172,000 for 2020. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Amount of sales 2. Margin of safety
ok " t 0 inces Baird Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 32,000 and 66,000 units per year. Revenue (40,eee units $11.00) Unit-level variable costs Materials cost (40,000 $3.00) x Labor cost (40,000 × $2.00) Manufacturing overhead (40,000 x $0.50) Shipping and handling (40,000 × $0.32) Sales commissions (40,000 × $2.00) Contribution margin Fixed expenses Advertising costs Salary of production supervisor Allocated companywide facility-level expenses Net loss Complete this question by entering your answers in the tabs below. Req A Required a. A large discount store has approached the owner of Baird about buying 9,000 calculators. It would…
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Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,600 unita) Variable expenses Total $ 243,200 136, 800 Per Unit $32.00 18.00 Contribution nargin 106,400 $ 14.00 ried expenses 55,000 5 51,400 et operating Lncone Required: (Consider each case independently): 1 What would be the revised net operating income per month if the sales volume increases by 50 units? 2 What would be the revised net operating income per month if the sales volume decreases by 50 units? 3. What would be the revised net operating income per month if the sales volume is 6,600 units? 1. Revined net operating income 2. Revised net operating income 3. Revised net operating income
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Restate the following income statement for a retailer in contribution format. Sales revenue ($100 per unit) $ 70,000 Less cost of goods sold ($58 per unit) 40,600 Gross margin 29,400 Less operating costs: Commissions expense ($6 per unit) $ 4,200 Salaries expense 7,900 Advertising expense 5,900 Shipping expense ($1 per unit) 700 18,700 Operating income $ 10,700 Per Unit select an income statement item $enter a dollar amount $enter a dollar amount select an opening name for section one : select an income statement item $enter a dollar amount enter a dollar amount select an income statement item…

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