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, $1,506 each from the manufacturer. Marwicks Pianos, Inc., sells the pianos to its customers at an average price of $2,400 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$954 per month
Sales salaries and commissions	$4,792 per month, plus 3% of sales
Delivery of pianos to customers	$58 per piano sold
Utilities	$639 per month
Depreciation of sales facilities	$5,080 per month
Administrative:
Executive salaries	$13,512 per month
Insurance	$703 per month
Clerical	$2,450 per month, plus $36 per piano sold
Depreciation of office equipment	$915 per month
Prepare an income statement for Marwicks Pianos, Inc., for August. Use the traditional format, with costs organized by function. 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.

During August, Marwicks Pianos, Inc., sold and delivered 60 pianos.

Required:
1.	Prepare an income statement for Marwicks Pianos, Inc., for August. Use the traditional format, with costs organized by function.