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ACC1103 CHAPTER 2 REQUIRED EXERCISES ailings Review View AlbcDdEes AaBbCcDc AaBbCeDdier Narma No Spacing Heasing 1 Perlod (Seling and Administralive) Cost Behevior Product Variable Cost
ACC1103 CHAPTER 2 REQUIRED EXERCISES ailings Review View AlbcDdEes AaBbCcDc AaBbCeDdier Narma No Spacing Heasing 1 Perlod (Seling and Administralive) Cost Behevior Product Variable Cost ltam Fied Cost Cost PROBLEM 2-19 Contribution Format versus Traditional Income Statement [LO6 Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick's Pianos, Inc., sells the pianos to its customers at an average price of $3,125 each. The selling and administrative costs that the company incurs in a typical month are presented below Costs Cost Formul Solling: Advertising Sales salaries and commissionsi Delvery planos to customers Uiios Depreciation of sales tacilities. Administrative: Exocutive salaries Insurancer Clarical Depreciation of office equipment.... $700 per month $950 per month, plus 8% of sales $30 per plano sold $360 per month $800 per month $2,500 per month $400 per month 1,000 per month, plus $20 per plano sold $300 per month During August, Marwick's Pianos, Inc., sold and delivered 40 pianos Required: 1. Prepare an income statement for Marwick's Pianos, Inc., for August. Use the traditional forrmat, with costs organized by function. 2. Redo (1) above, this time using the contribution format, with costs organized by behavior. 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? Fo MacBookA
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