Example The cost of groceries used in meal preparation... PROBLEM 1-21 Traditional and Contribution Format Income Statements L01-6 Marwick's Pianos, Inc. 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: Costs Cost Formula Selling: Advertising..... Sales salaries and commissions..... Delivery of planos 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 Chapter 1 During August, Marwick's Pianos, Inc., 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. 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? PROBLEM 1-22 Cost Terminology; Contribution Format Income Statement L01-2, L01-4, LO1-6