Thomas Inc., purchases pianos from a large manufacturer for an average cost of $1,960 per unit and then sells them to retail customers for an average price of $2,780 each. The company's selling and administrative costs for a typical month are presented below: Selling: Advertising Cost Sales salaries and commissions $650 per month Cost Formula $820 per month, plus 7% of sales $28 per piano sold Delivery of pianos to customers Utilities $400 per month Depreciation of sales facilities $740 per month Administrative: Executive salaries Insurance Clerical Depreciation of office equipment $2,200 per month $340 per month $900 per month, plus $20 per piano sold $300 per month During August, Thomas Inc., sold and delivered 55 pianos. Required: 1. Prepare a traditional format income statement for February. (8 points) 2. Prepare a variable costing income statement for February. Show costs and revenues on both a total and a per unit basis down through contribution margin. (8 points) 3. Refer to the income statement you prepared in (2) above. Why might it be misleading to show the fixed costs on a per unit basis? Additionally, briefly explain why variable income statement is useful for management team. (4 points) Thomas Inc., purchases pianos from a large manufacturer for an average cost of $1,960 per unit and then sells them to retail customers for an average price of $2,780 each. The company's selling and administrative costs for a typical month are presented below: Selling: Advertising Cost Sales salaries and commissions $650 per month Cost Formula $820 per month, plus 7% of sales $28 per piano sold Delivery of pianos to customers Utilities $400 per month Depreciation of sales facilities $740 per month Administrative: Executive salaries Insurance Clerical Depreciation of office equipment $2,200 per month $340 per month $900 per month, plus $20 per piano sold $300 per month During August, Thomas Inc., sold and delivered 55 pianos. Required: 1. Prepare a traditional format income statement for February. (8 points) 2. Prepare a variable costing income statement for February. Show costs and revenues on both a total and a per unit basis down through contribution margin. (8 points) 3. Refer to the income statement you prepared in (2) above. Why might it be misleading to show the fixed costs on a per unit basis? Additionally, briefly explain why variable income statement is useful for management team. (4 points)