Question
Marwicks Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,512 each from
Marwicks Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,512 each from the manufacturer. Marwicks Pianos, Inc., sells the pianos to its customers at an average price of $2,600 each. The selling and administrative costs that the company incurs in a typical month are presented below: |
Costs | Cost Formula |
Selling: | |
Advertising | $930 per month |
Sales salaries and commissions | $4,810 per month, plus 4% of sales |
Delivery of pianos to customers | $59 per piano sold |
Utilities | $657 per month |
Depreciation of sales facilities | $5,073 per month |
Administrative: | |
Executive salaries | $13,454 per month |
Insurance | $683 per month |
Clerical | $2,478 per month, plus $38 per piano sold |
Depreciation of office equipment | $895 per month |
During August, Marwicks Pianos, Inc., sold and delivered 65 pianos. |
Required: | |
1. | Prepare an income statement for Marwicks Pianos, Inc., for August. Use the traditional format, with costs organized by function. (A "Net operating loss" should be entered as a negative number.) |
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. (A "Net operating loss" should be entered as a negative number.) |
rev: 09_04_2014_QC_52922
Garrison 15e Recheck 2014-12-17
References
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WorksheetDifficulty: 1 Easy
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