Question

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,501 per unit and then sells them to retail customers for an average price of $2,700 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 941 per month Sales salaries and commissions $ 4,797 per month, plus 5% of sales Delivery of pianos to customers $ 58 per piano sold Utilities $ 643 per month Depreciation of sales facilities $ 5,048 per month Administrative: Executive salaries $ 13,536 per month Insurance $ 709 per month Clerical $ 2,524 per month, plus $44 per piano sold Depreciation of office equipment $ 891 per month During August, Marwick’s Pianos, Inc., sold and delivered 63 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.

Answer 1

Answer 1.

Answer 2.