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Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell,

Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,250 each. The average cost of a television from the manufacturer is $1,340.

Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows:

Costs Cost Formula
Selling:
Advertising $ 1,135 per month
Delivery of televisions $ 45 per television sold
Sales salaries and commissions $ 3,070 per month, plus 4% of sales
Utilities $ 460 per month
Depreciation of sales facilities $ 3,660 per month
Administrative:
Executive salaries $ 9,550 per month
Depreciation of office equipment $ 520 per month
Clerical $ 1,660 per month, plus $41 per television sold
Insurance $ 480 per month

During April, the company sold and delivered 210 televisions.

Required:
1.

Prepare an income statement for April using the traditional format with costs organized by function.

2.

Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin.

.

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