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Marwicks Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,510 per unit and then sells them to retail customers for an
Marwicks Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,510 per unit and then sells them to retail customers for an average price of $2,300 each. The companys selling and administrative costs for a typical month are presented below:
Costs | Cost Formula |
---|---|
Selling: | |
Advertising | $948 per month |
Sales salaries and commissions | $4,827 per month, plus 4% of sales |
Delivery of pianos to customers | $58 per piano sold |
Utilities | $663 per month |
Depreciation of sales facilities | $4,995 per month |
Administrative: | |
Executive salaries | $13,422 per month |
Insurance | $695 per month |
Clerical | $2,545 per month, plus $45 per piano sold |
Depreciation of office equipment | $913 per month |
During August, Marwicks Pianos, Incorporated, sold and delivered 56 pianos.
Required:
- Prepare a traditional format income statement for August.
- 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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