Question

Marwick's Pianos, Inc., purchases planos from a large manufacturer for an average cost of $1,505 per unit and then sells them to retail customers for an average price of $3,400 each. The company's selling and administrative costs for a typical month are presented below Cost Formula Song Advertising $950 per month Sales salaries and commissions 54,820 per month, plus 6% of sales Delivery of plans to customers $81 per piano sold Us 5667 per month Depreciation of sales facilites $5,009 per month Administrative Executive salaries $13.496 per month Insurance $700 per month Clerical $2,507 per month, plus $42 per piano sold Depreciation of office equipment $905 per month During August, Marwick's Pianos, Inc., sold and delivered 61 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.

Need traditional income statement.

Answer 1

Traditional Income Statement:

Marwick's Pianos. Inc.
Traditional Income Statement
For the Month of August
Sales revenue (61 x $3,400)		$207,400
Cost of goods sold (61 x $1,505)		($91,805)
Gross profit		$115,595
Selling and administrative expenses:
Selling expenses:
Advertising expense	$950
Salaries Expense	$4,820
Commission expense (207,400 x 6%)	$12,444
Delivery expense	$667
Depreciation expense-Sales facilities	$5,009
Total selling expenses	$23,890
Administrative expenses:
Salaries expense	$13,496
Insurance expense	$700
Salaries expense	$2,507
Commission expense (61 x $42)	$2,562
Depreciation expense-office equipment	$905
Total administrative expense	$20,170
Total selling and administrative expenses		$44,060
Net income		$71,535