PROBLEM 3-11 Contribution Format versus Traditional Income Statement [L04] Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick's Pianos, Inc., sells the pianos to its customers at an average price of $3,125 each. The selling and administrative costs that the company incurs in a typical month are presented below Costs Cost Formula Selling. Sales salaries and commissions .....-. . Delivery of pianos to Utilities Depreciation of sales facilities $700 per month $950 per month, plus 8% of sales $30 per piano sold $350 per month $800 per month Administrative: Executive salaries Insurance Clerical Depreciation of office equipment $2,500 per month $400 per month $1,000 per month, plus $20 per piano sold $300 per month ..$ During August, Marwick's Pianos, Inc., sold and delivered 40 pianos. Required: I. Prepare an income statement for Marwick's Pianos, Inc., for August. Use the traditional format, with costs organized by function. Redo (1) above, 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. 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? 2. 3