2. Prepare an income statement for Marwicks Pianos, Inc., for August, this time using the contribution format,
Question:
2. Prepare an income statement for Marwick’s Pianos, Inc., for August, this time using the contribution format, with costs organized by behavior. Show costs and revenues on both a total and a per unit basis down through contribution margin
2.
value:
10.00 points
Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,485 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $2,600 each. The selling and administrative costs that the company incurs in a typical month are presented below: |
Costs | Cost Formula |
Selling: | |
Advertising | $947 per month |
Sales salaries and commissions | $4,804 per month, plus 5% of sales |
Delivery of pianos to customers | $60 per piano sold |
Utilities | $652 per month |
Depreciation of sales facilities | $4,943 per month |
Administrative: | |
Executive salaries | $13,525 per month |
Insurance | $681 per month |
Clerical | $2,459 per month, plus $40 per piano sold |
Depreciation of office equipment | $945 per month |
During August, Marwick’s Pianos, Inc., sold and delivered 62 pianos. |
Required: | |
1. | Prepare an income statement for Marwick’s Pianos, Inc., for August. Use the traditional format, with costs organized by function. |
2. | Prepare an income statement for Marwick’s Pianos, Inc., for August, this time using the contribution format, with costs organized by behavior. Show costs and revenues on both a total and a per unit basis down through contribution margin. |
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain