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 $1,514 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 $1,514 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: Cost Formula Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities $933 per month $4,827 per month, plus 5% of sales $59 per piano sold $647 per month $4,988 per month 98 month $13,526 per month $701 per month $2,498 per month, plus $35 per piano sold $946 per month Administrative: Executive salaries Insurance Clerical Depreciation of office equipment 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