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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

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WorksheetDifficulty: 1 Easy

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