Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $2,450 per unit and then sells them to retail customers for an average price of $3,125 each. The companys selling and administrative costs for a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$ 700	per month
Sales salaries and commissions	$ 950	per month, plus 8% of sales
Delivery of pianos to customers	$ 30	per piano sold
Utilities	$ 350	per month
Depreciation of sales facilities	$ 800	per month
Administrative:
Executive salaries	$ 2,500	per month
Insurance	$ 400	per month
Clerical	$ 1,000	per month, plus $20 per piano sold
Depreciation of office equipment	$ 300	per month

During August, Marwicks Pianos, Incorporated, sold and delivered 40 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.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 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.

Marwick's Pianos, Incorporated
Contribution Format Income Statement
For the Month of August
	Total	Per Piano
Sales
Variable expenses:
Cost of goods sold
Total variable expenses	0	0
Contribution margin
Fixed expenses:
Total fixed expenses	0
Net operating income