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 $1,483 per unit and then sells them to retail customers for an average price of $3,200 each. The companys selling and administrative costs for a typical month are presented below:

Problem 1-21 Traditional and Contribution Format Income Statements [LO1-6] Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,483 per unit and then sells them to retail customers for an average price of $3,200 each. The company's selling and administrative costs for a typical month are presented below Costs Cost Formula Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities $966 per month $4,777 per month, plus 4% of sales $61 per piano sold $662 per month $5,041 per month Administrative: Executive salaries Insurance Clerical Depreciation of office equipment $13,491 per montlh $717 per month $2,464 per month, plus $36 per piano sold $902 per month During August, Marwick's Pianos, Inc., 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