Question

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,502 per unit and then sells them to retail customers for an average price of $3,000 each. The company's selling and administrative costs for a typical month are presented below: Dints Cost Formula eBook 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 $953 per month $4,794 per month, plus 5% of sales $60 per piano sold $665 per month $5,098 per month Print References $13,442 per month $717 per month $2,487 per month, plus $43 per piano sold $868 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. Complete this question by entering your answers in the tabs below.

Answer 1

1890001 946261 94374 Merwick's Pianos, Inc Traditional Income Statement For the Month of August sales Revneue (3000*63) Cost of Goods Sold (1502*63) Gross Margin selling and Administrative Expenses Selling Expenses Advertising Sales Salaries and Commission (4794+189000*5%) Delivary of Pianos (60/63) Utilities Depreciation of Sales facilities Total Selling Expenses Administrative Expenses Executive Salaries Insurance Expenses Clerical Depreciaiton of Office Equipment Total Administrative Expenses Total Selling and Administrative Expenses Net operating income 953 14244 3780 665 5098 24740 13442 717 5196 868 20223 44963 49411

Merwick's Pianos, Inc Contribution Formate Income Statement For the Month of August Total Per Piano sales Revneue 189000 3000 Varaible Expenses Cost of Goods Sold 94626 1502 Sales Salaries and Commission 9450 150 Delivery of Pianos 3780 60 Clerical 2709 43 Total Variable Expenses 110565 1755 Contribution Margin 78435 1245 Fixed Expenses Advertisements 953 Sales Salaries and Commission 4794 Utilities 665 Depreciaiton of Office Equipment 5098 Depreciaiton of sales Facilities 868 Execitive Slaries 13442 Insurance 717 Clarical 2487 Total Fixed Cost 29024 Net operating Income 49411