Question

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Problem 1-21 Traditional and Contribution Format Income Statements (L01-6] Marwick's Pianos, Inc., purchases planos from a large manufacturer for an average cost of $1,481 per unit and then sells them to retail customers for an average price of $2,700 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 $959 per month $4,788 per month, plus 6% of sales $59 per piano sold $655 per month $5,021 per month $13,482 per month $714 per month $2,469 per month, plus $36 per piano sold $915 per month During August, Marwick's Pianos, Inc, sold and delivered 59 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.

Answer 1

24,462 Traditional Income stalenel for the month of August Tevenues: Sales revenue C59 piano @ 2700) 159,300 Tess: Cost of goods sold C59 pianos @ 1481 87379 Grooss poono 71.921 less Expenses Seeelg expenses Adveo lising expense 959 Sales Solares Commission (4788 +64x154300) 14,346 becovery expenses (59x59) 3,481 OHHey expenses 655 Depredebeo expenses 5,021 total geolong expenses Admin exposes Gecelttie solaries 13,482 Insurance expenses 714 Clerical scalories 02,469 + 36x59) 4,593 beproefabon on d-HCe caupman 915 Toteel nomen expenses 19,704 Noe income 27,755 Cont Ruralfoo Foomat pncome Stalemal fuo month - August- Zoals per pac Sales 159,300 2700 less Valable experes cost d-Goods sold 87,379 1481 Soles Scolades E Commason 9,558 162 Deo very expenses 59 Clerical safes 2124 36 Total variable cost 102,542 17738 To tell contoh bulfon margin 56758 962 ess: fed expenses (cost): 959 16:35 Advestisping expenses 4,788 81.55 Srces salades Commission 655 11. to Ollohe expenses 13,482 223.51 Executive scores 12.10 Insurance ex porse. 2.469 41.85 Clerc scoate pepeofal pon expenses 915 15.51 23982 Net Prone 72,776 19 348) 714 7016 Fixed COSE