Question
Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,481 per unit and then sells them to retail customers
Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,481 per unit and then sells them to retail customers for an average price of $2,700 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment Cost Formula $964 per month $4,799 per month, plus 4% of sales $58 per piano sold $639 per month $4,956 per month $13,432 per month $702 per month $2,500 per month, plus $41 per piano sold $900 per month During August, Marwick's Pianos, Inc., sold and delivered 58 pianos. Required: 1. Prepare a traditional format income statement for August 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.
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