Chapter 03

House of Pianos, Inc. purchases pianos from a well-known manufacturer and sells them at the retail level. The pianos sell, on the average, for $2,600 each. The average cost of a piano from the manufacturer is $1,750.

House of Pianos, Inc. has always kept careful records of its costs. The costs that the company incurs in a typical month are presented below:

Costs		Cost Formula
Selling:
Advertising	$1,650.00	per month
Delivery of Pianos	$80.00	per piano sold
Sales Salaries and Commissions	$3,500.00	per month, plus 3% of sales
Utilities	$800.00	per month
Depreciation of Sales Facilities	$4,600.00	per month
Administrative:
Executive Salaries	$15,500.00	per month
Depreciation of Office Equipment	$700.00	per month
Clerical	$2,900.00	per month, plus $50 per piano sold
Insurance	$750.00	per month

During November, the company sold and delivered 95 pianos.

1. Prepare a Contribution Format income statement for November with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin. 12 marks