Question

Marwick's Pianos, Inc., purchases planos from a large manufacturer for an average cost of $2,450 per unit and then sells them to retail customers for an average price of $3,125 each. The company's selling and administrative costs for a typical month are presented below Cost Formula costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment $700 per month $950 per month, plus 8% of sales $30 per piano sold $350 per month $800 per month $2,500 per month $400 per month $1,000 per month, plus $20 per piano sold $300 per month During August, Marwick's Pianos, Inc., sold and delivered 40 planos 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 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.

Answer 1

	Total	Per piano
Sales	125000	3125
Variable expenses
Cost of goods sold	98000	2450
Sales salaries and commission	21400	535
Delivery of pianos to customers	1200	30
Clerical	12800	320
Total Variable expenses	133400.00	3335
Fixed Costs
Advertising	8400
utilities	4200
Depreciation of sales facilities	9600
Executive salaries	30000
Insurance	4800
Depreciation of office equipment	3600
Total Fixed cost	60600