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

Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,480 per unit and then sells them to retail customers for an average price of $2,900 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	$	4,830 per month, plus 5% of sales
Delivery of pianos to customers	$	61 per piano sold
Utilities	$	652 per month
Depreciation of sales facilities	$	5,075 per month
Administrative:
Executive salaries	$	13,584 per month
Insurance	$	709 per month
Clerical	$	2,545 per month, plus $39 per piano sold
Depreciation of office equipment	$	917 per month

During August, Marwicks Pianos, Inc., sold and delivered 61 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.