Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,509 per unit and then sells them to retail customers for an average price of $2,600 each. The company’s selling and administrative costs for a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$	946 per month
Sales salaries and commissions	$	4,788 per month, plus 4% of sales
Delivery of pianos to customers	$	57 per piano sold
Utilities	$	662 per month
Depreciation of sales facilities	$	5,076 per month
Administrative:
Executive salaries	$	13,403 per month
Insurance	$	716 per month
Clerical	$	2,515 per month, plus $38 per piano sold
Depreciation of office equipment	$	863 per month

During August, Marwick’s Pianos, Inc., sold and delivered 61pianos.

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.

Answer rating: 100% (QA)

Traditional Income Statement Sales 15860000 61 x 2600 Cost of goods sold 9204900 61 x 1509 Gross mar... View the full answer