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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:

  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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