Question

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1499 per unit and then sells them to retail customers for an average price of $3,300 each. 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 Insurance Clerical Depreciation of office equipment $951 per month $4,811 per month, plus 4% of sales $60 per piano sold $646 per month $4,965 per month $13,527 per month 5689 per month 52,539 per month, plus 543 per piano sold $855 per month During August, Marwick's Planos, Inc., sold and delivered 55 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 bass down through contribution margin Complete this question by entering your answers in the tabs below. < Prev 4 of 5 8 Next > Now

Answer 1

Column1	Column2	Column3	Column4	Column5	Column6	Column7	Column8	Column9
Traditional Income Statement
Sales		(55*3,300)					181500
Cost of goods sold		(55*1,499)					82445
Gross margin							99055
Selling and administrative expense
Selling expenses:
Advertising						951
Sales salaries and commission			(4811+181500*4%)			12071
Delivery of pianos						3300
Utilities						646
Depreciation of sales facilities						4,965
Total selling expense						21,933
Administrative expenses
Executive salaries						13,527
Insurance						689
Clerical			(2539+55*43)			4904
Depreciation of office equipment						855
Total administrative expense						19,975
total selling And administrative expense							41,908
Net operating loss							57,147
Contribution Format income statement
						total	per piano
Sales						181500	3,300
Variable expenses
Sales salaries and commission						7260	132
Delivery of pianos						3300	60
Clerical						2365	43
Cost of good sold						82445	1,499
total variable expenses						95370	1734
Contribution margin						86130	1,566
Fixed expenses:
Advertising						951
Sales salaries and commission						4,811
Utilities						646
Depreciation of office equipment						855
Depreciation of sales Facilities						4,965
Executive salaries						13,527
insurance						689
clerical						2,539
total fixed expenses						28,983
Net operating income						57,147