Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $2,450 per unit and then sells them to retail customers for an average price of $3,125 each. The company’s selling and administrative costs for a typical month are presented below:

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 Cost Formula $700 per month $950 per month, plus 8% of sales $30 per piano sold $350 per month $800 per month $2,500 per month $400 per month $1,000 per month, plus $20 per piano sold $300 per month During August, Marwick’s Pianos, sold and delivered 40 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.
3. Refer to the income statement you prepared in (2) above.
Why might it be misleading to show the fixed costs on a per unit basis?