Problem 1-21 (Algo) Traditional and Contribution Format Income Statements [LO1-6]

Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,507 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	$961 per month
Sales salaries and commissions	$4,801 per month, plus 3% of sales
Delivery of pianos to customers	$59 per piano sold
Utilities	$648 per month
Depreciation of sales facilities	$5,096 per month
Administrative:
Executive salaries	$13,489 per month
Insurance	$681 per month
Clerical	$2,458 per month, plus $44 per piano sold
Depreciation of office equipment	$872 per month

During August, Marwicks Pianos, Incorporated, sold and delivered 59 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.