Problem 1-19A Contribution Format versus Traditional Income Statement [LO1-6]

Marwicks Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,508 each from the manufacturer. Marwicks Pianos, Inc., sells the pianos to its customers at an average price of $3,200 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$970 per month
Sales salaries and commissions	$4,775 per month, plus 3% of sales
Delivery of pianos to customers	$62 per piano sold
Utilities	$649 per month
Depreciation of sales facilities	$4,922 per month
Administrative:
Executive salaries	$13,498 per month
Insurance	$702 per month
Clerical	$2,479 per month, plus $44 per piano sold
Depreciation of office equipment	$897 per month

During August, Marwicks Pianos, Inc., sold and delivered 63 pianos.

Required:

1.

Prepare an income statement for Marwicks Pianos, Inc., for August. Use the traditional format, with costs organized by function. (A "Net operating loss" should be entered as a negative number.)

Marwick's Piano's INC

Traditional Income Statement

For The Month Of Aug

Selling and administrative exspenses:
Selling Exspenses:
Total Selling Exspenses:
Administrateve Exspenses:
Total administratie Exspenses:
Total Selling and Administrative Exspenses:

2.

Prepare an income statement for Marwicks 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. (A "Net operating loss" should be entered as a negative number.)

Marwicks Pianio Inc

Contribution Format Income Statement

For the month of Aug

	Total	Per Piano
Variable Exspenses:
Total Variable exspenses:
Contribution Margin:
Fixed Exspenses:
Total Fixed Exspenses: