Question

Problem 1-21 Traditional and Contribution Format Income Statements (LO1-6) 1.25 points Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,507 per unit and then sells them to retail customers for an average price of $2,200 each. The company's selling and administrative costs for a typical month are presented below: eBook Print Costs Cost Formula Selling: Advertising $953 per month Sales salaries and commissions $4,798 per month, plus 5% of sales Delivery of pianos to customers $62 per piano sold Utilities $661 per month Depreciation of sales facilities $5,052 per month Administrative: Executive salaries $13,453 per month Insurance $690 per month Clerical 62,525 per month, plus $41 per piano sold Depreciation of office $864 per month equipment Reference During August, Marwick's Pianos, Inc., sold and delivered 56 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. Required 1 Required 2 Prepare a traditional format income statement for August. (A "Net operating loss" should be entered as a negative number.) Marwick's Pianos, Inc. Traditional Income Statement For the Month of August Selling and administrative expenses: Selling expenses:

Answer 1

Merwick's Pianos, Inc Traditional Income Statement For the Month of August % sales Revneue (2200*56) 2 Cost of Goods Sold (1507*56) Gross Margin selling and Administrative Expenses Selling Expenses Advertising 1 Sales Salaries and Commission 123200 84392 38808 953 10958 Delivary of Pianos 3472 Utilities 661 Depreciation of Sales facilities Total Selling Expenses Administrative Expenses 5052 21096 Executive Salaries 13453 Insurance Expenses 690 Clerical 4821 Depreciaiton of Office Equipment Total Administrative Expenses 864 19828 Total Selling and Administrative Expenses 40924 Net operating income -2116

Merwick's Pianos, Inc Contribution Formate Income Statement For the Month of August Per Piano Total sales Revneue 123200 2200 Varaible Expenses Cost of Goods Sold 84392 1507 Sales Salaries and Commission 6160 110 Delivery of Pianos 3472 62 Clerical 2296 41 Total Variable Expenses Contribution Margin Fixed Expenses Advertisements Sales Salaries and Commission Utilities Depreciaiton of Office Equipment Depreciaiton of sales Facilities Execitive Slaries 96320 1720 26880 480 953 4798 661 5052 864 13453 Insurance 690 Clarical 2525 Total Fixed Cost 28996 Net operating Income -2116