Question

Marwick's Pianos, Ic., purchases pianos from a large manufacturer for an average cost of $1,511 per unit and then sells them to retail customers for an average price of $2,600 each. The company's selling and administrative costs for a typical month are presented below: Cost Formula Costs Selling: Advertising $967 per month $4,823 per month, plus 3% of sales $60 per piano sold $657 per month $5,017 per month Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries $13,421 per month $696 per month $2,491 per month, plus $37 per piano sold $858 per month Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Ic., sold and delivered 65 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. Complete this question by entering your answers in the tabs below. Required 1 Required 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. (A "Net operating loss" should be entered as a negative number.) Marwick's Pianos, Inc. Contribution Format Income Statement For the Month of August

Answer 1

Solution

Marwick's Pianos Inc
Traditional Income Stetement
For the Month of August
Sales revenue		$   1,69,000.00
Less: Cost of Goods sold		$       98,215.00
Gross Profit		$       70,785.00
Selling and Administrative Expenese
Selling Expenses
Advertising	$             967.00
Sales salaries and Commission	$          9,893.00
Delivey Expense	$          3,900.00
Utilities	$             657.00
Depreciation of sales facility	$          5,017.00
Total Selling Expenses	$       20,434.00
Administrative Expenses
Executive Salaries	$       13,421.00
Iinsurance	$             696.00
Clerical	$          4,896.00
Deprecioation- Office Equipment	$             858.00
Total Administrative expenses	$       19,871.00
Total Selling and Administrative Expenese		$       40,305.00
Net income		$       30,480.00

.

Marwick's Pianos Inc
Contribution formal Income statement
For the Month of August
	Total	Per Piano
Sales	$    1,69,000.00	$         2,600.00
variable Expenses
Direct material cost	$       98,215.00	$         1,511.00
Variable Sales salaries and Commission	$          5,070.00	$               78.00
Delivery Expenses	$          3,900.00	$               60.00
Clerical	$          2,405.00	$               37.00
Total Variable Cost	$    1,09,590.00	$         1,686.00
Contribution Margin	$       59,410.00	$             914.00
Fixed costs
Advertising	$             967.00
Fixed Sales salaries and Commission	$          4,823.00
Utilities	$             657.00
Depreciation- Sales Facility	$          5,017.00
Executive salaries	$       13,421.00
Insurance	$             696.00
Clerical fixed cost	$          2,491.00
Depreciation- Office equipment	$             858.00
Total Fixed cost	$       28,930.00
Net Income	$       30,480.00