Problem 1-21 (Static) Traditional and Contribution Format Income Statements (LO1-6] 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 company's selling and administrative costs for a typical month are presented below: Cost Formula Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Insurance clerical Depreciation of office equipment $700 per month $950 per month, plus 8% of sales $30 per piano sold $350 per month $800 per month $2,500 per month $ 400 per month $1,000 per month, plus $ 20 per piano sold $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. Prepare a traditional format income statement for August. Marwick's Pianos, Incorporated Traditional Income Statement For the Month of August Sales $ 125,000 98,000 27,000 Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses: Selling expenses Administrative expenses X $ 14,000 X 5,000 19,000 Total selling expenses Administrative expenses: Administrative expenses Total administrative expenses 0 Total selling and administrative expenses Net operating income 19,000 8,000 $