Question

Chapter 1 Practice Problems i Saved Help Save & Exit Submit Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,492 per unit and then sells them to retail customers for an average price of $2,100 each. The company's selling and administrative costs for a typical month are presented below: Cost Formula points 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 $962 per month $4,778 per month, plus 4% of sales $60 per piano sold $644 per month $4,973 per month eBook $13, 495 per month $714 per month $2,514 per month, plus $40 per piano sold $943 per month Print During August, Marwick's Pianos, Inc., sold and delivered 55 pianos. References 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 traditional format income statement for August. (A "Net operating loss" should be entered as a negative number.) Marwick's Pianos, Inc. Traditional Income Statement For the Month of August Selling and administrative expenses: Selling expenses:

Answer 1

Solution

Marwick's Pianos Inc
Traditional Income Stetement
For the Month of August
Sales revenue		$   1,15,500.00
Less: Cost of Goods sold		$       82,060.00
Gross Profit		$       33,440.00
Selling and Administrative Expenese
Selling Expenses
Advertising	$             962.00
Sales salaries and Commission	$          9,398.00
Delivey Expense	$          3,300.00
Utilities	$             644.00
Depreciation of sales facility	$          4,973.00
Total Selling Expenses	$       19,277.00
Administrative Expenses
Executive Salaries	$       13,495.00
Iinsurance	$             714.00
Clerical	$          4,714.00
Deprecioation- Office Equipment	$             943.00
Total Administrative expenses	$       19,866.00
Total Selling and Administrative Expenese		$       39,143.00
Net income		$       (5,703.00)

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Marwick's Pianos Inc
Contribution formal Income statement
For the Month of August
	Total	Per Piano
Sales	$    1,15,500.00	$         2,100.00
variable Expenses
Direct material cost	$       82,060.00	$         1,492.00
Variable Sales salaries and Commission	$          4,620.00	$               84.00
Delivery Expenses	$          3,300.00	$               60.00
Clerical	$          2,200.00	$               40.00
Total Variable Cost	$       92,180.00	$         1,676.00
Contribution Margin	$       23,320.00	$             424.00
Fixed costs
Advertising	$             962.00
Fixed Sales salaries and Commission	$          4,778.00
Utilities	$             644.00
Depreciation- Sales Facility	$          4,973.00
Executive salaries	$       13,495.00
Insurance	$             714.00
Clerical fixed cost	$          2,514.00
Depreciation- Office equipment	$             943.00
Total Fixed cost	$       29,023.00
Net Income	$       (5,703.00)