Question
In: Accounting
Problem 1-21 Traditional and Contribution Format Income Statements [LO1-6] Marwick’s Pianos, Inc., purchases pianos from a...
Problem 1-21 Traditional and Contribution Format Income Statements [LO1-6]
Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,517 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 | Cost Formula | |
| Selling: | ||
| Advertising | $ | 942 per month |
| Sales salaries and commissions | $ | 4,804 per month, plus 3% of sales |
| Delivery of pianos to customers | $ | 58 per piano sold |
| Utilities | $ | 662 per month |
| Depreciation of sales facilities | $ | 4,915 per month |
| Administrative: | ||
| Executive salaries | $ | 13,475 per month |
| Insurance | $ | 701 per month |
| Clerical | $ | 2,507 per month, plus $41 per piano sold |
| Depreciation of office equipment | $ | 858 per month |
During August, Marwick’s Pianos, Inc., 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.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Problem 1-21 (Algo) Traditional and Contribution Format Income Statements [LO1-6] Marwick’s Pianos, Inc., purchases pianos from...
Problem 1-21 (Algo) Traditional and Contribution Format Income
Statements [LO1-6]
Marwick’s Pianos, Inc., purchases pianos from a large
manufacturer for an average cost of $1,509 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:
Costs
Cost Formula
Selling:
Advertising
$
946 per month
Sales salaries and commissions
$
4,788 per month, plus 4% of sales
Delivery of pianos to customers...
Exercise 1-6 (Algo) Traditional and Contribution Format Income Statements [LO1-6] Cherokee Inc. is a merchandiser that...
Exercise 1-6 (Algo) Traditional and Contribution Format Income
Statements [LO1-6]
Cherokee Inc. is a merchandiser that provided the following
information:
Amount
Number of units sold
10,000
Selling price per unit
$
17
Variable selling expense per unit
$
2
Variable administrative expense per unit
$
3
Total fixed selling expense
$
19,000
Total fixed administrative expense
$
15,000
Beginning merchandise inventory
$
9,000
Ending merchandise inventory
$
23,000
Merchandise purchases
$
89,000
Required:
1. Prepare a traditional income statement.
2....
Exercise 1-6 Traditional and Contribution Format Income Statements [LO1-6] Cherokee Inc. is a merchandiser that provided...
Exercise 1-6 Traditional and Contribution Format Income
Statements [LO1-6]
Cherokee Inc. is
a merchandiser that provided the following information:
Number of units sold
13,000
Selling price per unit
$
17
Variable selling expense per unit
$
2
Variable administrative expense per unit
$
2
Total fixed selling expense
$
20,000
Total fixed administrative expense
$
14,000
Beginning merchandise inventory
$
8,000
Ending merchandise inventory
$
22,000
Merchandise purchases
$
88,000
Required:
1.
Prepare a traditional income statement.
Cherokee, Inc.
Traditional...
Exercise 1-6 (Algo) Traditional and Contribution Format Income Statements [LO1-6] Cherokee Inc. is a merchandiser that...
Exercise 1-6 (Algo) Traditional and Contribution Format Income
Statements [LO1-6]
Cherokee Inc. is a merchandiser that provided the following
information:
Amount
Number of units sold
13,000
Selling price per unit
$
17
Variable selling expense per unit
$
1
Variable administrative expense per unit
$
3
Total fixed selling expense
$
20,000
Total fixed administrative expense
$
16,000
Beginning merchandise inventory
$
9,000
Ending merchandise inventory
$
23,000
Merchandise purchases
$
87,000
Required:
1. Prepare a traditional income statement.
2....
Problem 1-25 Traditional and Contribution Format Income Statements [LO1-6] Milden Company is a merchandiser that plans...
Problem 1-25 Traditional and Contribution Format Income
Statements [LO1-6]
Milden Company is a merchandiser that plans to sell 31,000 units
during the next quarter at a selling price of $55 per unit. The
company also gathered the following cost estimates for the next
quarter:
Cost
Cost Formula
Cost of good sold
$25 per unit sold
Advertising expense
$175,000 per quarter
Sales commissions
6% of sales
Shipping expense
$60,000 per quarter + $5.00 per unit sold
Administrative salaries
$85,000 per quarter...
Problem 1-25 Traditional and Contribution Format Income Statements [LO1-6] Milden Company is a merchandiser that plans...
Problem 1-25 Traditional and Contribution Format Income
Statements [LO1-6] Milden Company is a merchandiser that plans to
sell 31,000 units during the next quarter at a selling price of $58
per unit. The company also gathered the following cost estimates
for the next quarter: Cost Cost Formula Cost of good sold $28 per
unit sold Advertising expense $178,000 per quarter Sales
commissions 5% of sales Shipping expense $48,000 per quarter +
$5.00 per unit sold Administrative salaries $88,000 per quarter...
Problem 1-19 Traditional and Contribution Format Income Statements [LO1-6] Todrick Company is a merchandiser that reported...
Problem 1-19 Traditional and Contribution Format Income
Statements [LO1-6]
Todrick Company is a merchandiser that reported the following
information based on 1,000 units sold:
Sales
$
285,000
Beginning merchandise inventory
$
19,000
Purchases
$
190,000
Ending merchandise inventory
$
9,500
Fixed selling expense
$
?
Fixed administrative expense
$
11,400
Variable selling expense
$
14,250
Variable administrative expense
$
?
Contribution margin
$
57,000
Net operating income
$
17,100
Required:
1. Prepare a contribution format income statement.
2. Prepare a...
Problem 1-19 Traditional and Contribution Format Income Statements [LO1-6] Todrick Company is a merchandiser that reported...
Problem 1-19 Traditional and Contribution Format Income
Statements [LO1-6]
Todrick Company is a merchandiser that reported the following
information based on 1,000 units sold:
Sales
$
285,000
Beginning merchandise inventory
$
19,000
Purchases
$
190,000
Ending merchandise inventory
$
9,500
Fixed selling expense
$
?
Fixed administrative expense
$
11,400
Variable selling expense
$
14,250
Variable administrative expense
$
?
Contribution margin
$
57,000
Net operating income
$
17,100
Required:
1. Prepare a contribution format income statement.
2. Prepare a...
Problem 1-25 Traditional and Contribution Format Income Statements [LO1-6] Milden Company is a merchandiser that plans...
Problem 1-25 Traditional and Contribution Format Income
Statements [LO1-6] Milden Company is a merchandiser that plans to
sell 31,000 units during the next quarter at a selling price of $58
per unit. The company also gathered the following cost estimates
for the next quarter: Cost Cost Formula Cost of good sold $28 per
unit sold Advertising expense $178,000 per quarter Sales
commissions 5% of sales Shipping expense $48,000 per quarter +
$5.00 per unit sold Administrative salaries $88,000 per quarter...
Traditional and Contribution Format Income Statements
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:Required:1. Prepare a contribution format income statement.2. Prepare a traditional format income statement.3. Calculate the selling price per unit.4. Calculate the variable cost per unit.5. Calculate the contribution margin per unit.6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales? Why?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Step 1 Picture yourself as a Senior Product Manager in your favorite industry. This could be...
- Gauss Jordan elimination using python for a 2d list (3x3) without using any library. Thanks
- What are some of the greatest barriers preventing our schools from meeting the educational goals for...
- What aspect of the materials used in nanotechnology differentiates it from the nanoscale devices that the...
- Postfix Arithmetic Operation (C++) Friday, 27 September 2019, 04:21 PM Use stack to implement postfix arithmetic...
- * What is the link between SOX compliance and law and information systems security? ** Why...
- A chemist has a substance which was either phenol or resorcinol. He puts the substance in...
ADVERTISEMENT