Question

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1.483 per unit and then sells them to retail customers for an average price of $2,600 esch. 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 $953 per month $4,813 per month, plus 4% of sales $62 per piano sold $667 per month $4.996 per month $13, 545 per month $784 per month $2,468 per month, plus $40 per piano sold $918 per month clerical Depreciation of office equipment 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 anda 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 Sales Cost of goods sold Gross margin Selling and administrative expenses Selling expenses Advertising S 953 Sales salaries and commissions [ 13.5451 14.498 Total selling expenses Administrative expenses: Total administrative expenses Total selling and administrative expenses 14,498 Required 2 >

Answer 1

Marwick Pianos Inc. Traditional Income Statement For the month of August $ IS 163,800 93,429 70,371 63 x 2600 63 x 1483 Less Sales Revenue Cost of goods sold Gross profit Selling & Administrative Expense Selling Expenses : Advertising Sales Salaries & Commission Delivery of Pianos to customers Utilities Depriciation of Sales Facilities Total Selling Expenses given 4813 + (163800 x 4%) 63 x 62 953 11,365 3,906 667 4,996 21,887 given given Administrative Expenses : Executive Salaries Insurance Clerical Depriciation of Office Equipment Total Administrative Expense Total Selling & Administrative Expense Net Profit/Loss 13,545 704 4,988 918 20,155 given given 2468 + (40 x 63) given $ 42,042 28,329 $ Marwick Pianos Inc. Contribution format Income Statement For the month of August Total Per Piano 2,600 163,800 $ 2600 x 63 units 1,483 104 93,429 $ 6,552 $ 3,906 $ 2,520 $ 106,407 $ 57,393 $ 1483 x 63 units 104 x 63 Units 62 x 63 Units 40 x 63 Units 62 40 1,689 911 Sales Revenue Variable Expenses Cost of Goods Sold Sales Salaries & Commission Delivery of Pianos Clerical Total variable expenses Contribution Margin Fixed Expenses Advertising Sales Salaries & Commission Utilities Depriciation of Sales Facilities Executive Salaries Insurance Clerical Depriciation of Office Equipment Total Fixed expenses Net Operating income (Loss) 953 4,813 667 4,996 13,545 704 2,468 918 29,064 28,329