Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,498 per unit and then sells them to retail customers for an average price of $2,700 each. The companys selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 937 per month Sales salaries and commissions $ 4,816 per month, plus 6% of sales Delivery of pianos to customers $ 61 per piano sold Utilities $ 665 per month Depreciation of sales facilities $ 4,941 per month Administrative: Executive salaries $ 13,487 per month Insurance $ 696 per month Clerical $ 2,513 per month, plus $40 per piano sold Depreciation of office equipment $ 919 per month During August, Marwicks Pianos, Incorporated, 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

Prepare a traditional format income statement for August. (A "Net operating loss" should be entered as a negative number.)

Marwick's Pianos, Incorporated
Traditional Income Statement
For the Month of August
Depreciation of sales facilities
Purchases
Gross margin
Selling and administrative expenses:
Selling expenses:
Advertising
Sales salaries and commissions
Delivery of pianos
Utilities
Depreciation of sales facilities
Total selling expenses	0
Administrative expenses:
Executive salaries
Insurance
Clerical
Depreciation of office equipment
Total administrative expenses	0
Total selling and administrative expenses		0
Net operating income

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. (A "Net operating loss" should be entered as a negative number.)

Marwick's Pianos, Incorporated
Contribution Format Income Statement
For the Month of August
	Total	Per Piano
Sales
Variable expenses:
Purchases
Sales salaries and commissions
Delivery of pianos
Clerical
Total variable expenses	0	0
Contribution margin
Fixed expenses:
Advertising
Sales salaries and commissions
Utilities
Depreciation of sales facilities
Executive salaries
Insurance
Clerical
Depreciation of office equipment
Total fixed expenses	0
Net operating income

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