Question

Problem 1-21 Traditional and Contribution Format Income Statements (LO1-6) Marwick's Planos, Inc., purchases planos 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 each. The company's selling and administrative costs for a typical month are presented below: Cast Formula selling Advertising Sales salaries and commissions of sales $942 per month $4,811 per month, plus 6 $59 per piano sold $632 per month $5,064 per month Depreciation of sales facilities Administrative $13,479 per month $684 per month $2,534 per month, plus $45 per piano sold $950 per month Depreciation of office equipment During August, Marwick's Planos, Inc., sold and delivered 57 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 1 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. (A "Net operating loss" should be entered as a negative number.) Marwick's Pianos, Inc. Contribution Format Income Statement For the Month of August Total Sales Variable expenses: Per Piano Total variable expenses Contribution margin Faced expenses: Total fixed expenses < Required 1 Required 2 )

Answer 1

Answer

--Requirement asked = Requirement 2

Contrinution Income Statement
	Total	Per Piano
Sales	$148,200	$2,600
Variable expenses:
Sales Salaries & commission	$8,892	$156
Delivery of pianos	$3,363	$59
Clerical	$2,565	$45
Cost of Goods Sold	$84,531	$1,483
Total Variable expenses	$99,351	$1,743
Contribution margin	$48,849	$857
Fixed expenses:
Advertising	$942
Sales salaries & commission	$4,811
Utilities	$632
Depreciation of office equipment	$5,064
Depreciation of sales facilities	$950
Executive salaries	$13,479
Insurance	$684
Clearical	$2,534
Total fixed expenses	$29,096
Net Operating Income	$19,753