Contribution Margin Format Income Statement

House of Keys, Inc. purchases pianos from a well$-$known manufacturer and sells them at the retail level. The pianos sell, on the average, for $$2,500$ each. The average cost to purchase a piano from the manufacturer is $$1,500.$ The costs that House of Keys incurs in a typical month are presented below.

COST COST FORMULA

Selling:

Advertising $$950$ per month

Delivery of pianos $$60$ per piano sold

Sales salaries and commissions $$4,800$ per month $+4\%$ of sales

Utilities for store $$650$ per month

Deprecation of store facilities $$5,000$

Administrative:

Executive salaries $$13,500$ per month

Depreciation of office equipment $$900$ per month

Clerical $$2,500$ per month $+$ $$40$ per piano sold

Insurance $$700$ per month

During the month of November, House of Keys sold and delivered $60$ pianos.

Required:

$1.$ Prepare an income statement for November using the traditional format with costs organized by function.

$2.$ Prepare an income statement for November using the contribution margin format $($costs organized by behavior$).$ Show revenues and costs in total and per unit through contribution margin.

$3.$ Why might it be misleading to show fixed costs on a per unit basis on the income statement prepared in $(2)?$