Question
Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,488 per unit and then sells them to retail customers for
Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,488 per unit and then sells them to retail customers for an average price of $2,600 each. The companys selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 947 per month Sales salaries and commissions $ 4,815 per month, plus 4% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 638 per month Depreciation of sales facilities $ 5,098 per month Administrative: Executive salaries $ 13,559 per month Insurance $ 719 per month Clerical $ 2,512 per month, plus $36 per piano sold Depreciation of office equipment $ 862 per month During August, Marwicks 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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