1-21 (Algo) Traditional and Contribution Format Income Statements [LO1-6] Marwick's Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,506 per unit and then sells them to retail customers for an average price of $2,500 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 $956 per month $4,799 per month, plus 5% of sales $58 per piano sold i $654 per month $5,097 per month $13,589 per month $699 per month $2,473 per month, plus $37 per piano sold $893 per month During August, Marwick's Pianos, Incorporated, sold and delivered 62 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. Sales Purchases Gross margin For the Month of August $ 155,000 93,372 61,628 Selling and administrative expenses: Selling expenses: Advertising 956 Sales salaries and commissions Delivery of pianos 3,596 Utilities 654 Depreciation of sales facilities 5,097 Total selling expenses 10,303 Administrative expenses: Executive salaries Insurance Depreciation of office equipment 13,589 699 893 Total administrative expenses Total selling and administrative expenses Net operating income 15,181 25,484 Contribution Format Income Statement For the Month of August Sales Variable expenses: Purchases Sales salaries and commissions Delivery of pianos Clerical Per Total Piano $ 155,000 93,372 3,596 Total variable expenses 96,968 Contribution margin Fixed expenses: Advertising Sales salaries and commissions Utilities Depreciation of sales facilities Executive salaries Insurance Clerical Depreciation of office equipment Total fixed expenses 0