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Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,520 per unit and then sells them

During August, Marwicks Pianos, Inc., sold and delivered 61 pianos. Required: 1. Prepare a traditional format income stateme

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Answer #1

1)

MARWICK'S PIANOS INC

TRADITIONAL FORMAT INCOME STATEMENT

FOR THE MONTH ENDED AUGUST

Sales revenue (61*3400) 207400
less:Cost of goods sold (61*1520) 92720
Gross margin 114680
Less:selling and administrative expense
Selling expense
Advertising 968
sales salaries and commissions [4793+ (207400*5%)] 15163
Delivery of pianos to customers (62*61)` 3782
Utilities 646
Depreciation of sales facilities 5041
Total selling expense 25600
Administrative expense
Executive salaries 13551
Insurance 714
Clerical [2511+ (38*61)] 4829
Depreciation of office equipment 879
Total administrative expense 19973
Total selling and administrative expense 45573
Net operating income 69107

b)

MARWICK'S PIANOS INC

CONTRIBUTION MARGIN INCOME STATEMENT

FOR THE MONTH ENDED AUGUST

Sales revenue (61*3400) 3400 207400
lesS:variable expense
Cost of sales 1520 92720
sales salaries and commissions 3400*5%=170 10370
Delivery of pianos to customers 62 3782
Clerical 38 2318
Total variable cost 1790 109190
Total contribution margin 1610 98210
Fixed cost
Advertising 968
sales salaries and commissions 4793
Utilities 646
Depreciation of sales facilities 5041
Executive salaries 13551
Insurance 714
Clerical 2511
Depreciation of office equipment 879
Total fixed cost 29103
Net operating income 69107
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