Marwicks Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,499 each from the manufacturer. Marwicks Pianos, Inc., sells the pianos to its customers at an average price of $3,100 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$941 per month
Sales salaries and commissions	$4,820 per month, plus 4% of sales
Delivery of pianos to customers	$58 per piano sold
Utilities	$663 per month
Depreciation of sales facilities	$4,976 per month
Administrative:
Executive salaries	$13,470 per month
Insurance	$702 per month
Clerical	$2,463 per month, plus $37 per piano sold
Depreciation of office equipment	$855 per month

During August, Marwicks Pianos, Inc., sold and delivered 58 pianos.

Required:

1.

Prepare an income statement for Marwicks Pianos, Inc., for August. Use the traditional format, with costs organized by function.

Marwick's Pianos, Inc.
Traditional Income Statement
For the Month of August
Sales		$179,800
Cost of goods sold		86,942
Gross margin
Selling and administrative expenses:
Selling expenses:
Advertising	$941
Sales salaries and commissions	12,012
Delivery of pianos	3,364
Utilities	663
Depreciation of sales facilities	4,976
Total selling expenses	21,956
Administrative expenses:
Executive salaries	13,470
Insurance	702
Clerical	4,609
Depreciation of office equipment	855
Total administrative expenses	19,636
Total selling and administrative expenses		41,592

2.

Prepare an income statement for Marwicks Pianos, Inc., for August, 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.

Marwick's Pianos, Inc.
Contribution Format Income Statement
For the Month of August
	Total	Per Piano
Sales	$179,800
Variable expenses:
Cost of goods sold	86,942
Selling expenses
Direct labor
Total variable expenses	86,942	0
Contribution margin
Fixed expenses:
Total fixed expenses	0