Problem : Contribution Format versus Traditional Income Statement [LO2-5]

House of Organs, Inc., purchases organs from a well-known manufacturer and sells them at the retail level. The organs sell, on the average, for $2,900 each. The average cost of an organ from the manufacturer is $1,485. The costs that the company incurs in a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$960 per month
Delivery of organs	$62 per organ sold
Sales salaries and commissions	$4,780 per month, plus 5% of sales
Utilities	$658 per month
Depreciation of sales facilities	$5,058 per month
Administrative:
Executive salaries	$13,545 per month
Depreciation of office equipment	$893 per month
Clerical	$2,512 per month, plus $42 per organ sold
Insurance	$715 per month

During November, the company sold and delivered 58 organs.

Required:
1.	Prepare a traditional income statement for November

HOUSE OF ORGANS, INC.
Traditional Income Statement
For the Month Ended November 30
Selling and administrative expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total selling and administrative expenses

Prepare a contribution format income statement for November. Show costs and revenues on both a total and a per unit basis down through contribution margin.

HOUSE OF ORGANS, INC.
Contribution Format Income Statement
For the Month Ended November 30
	Total	Per unit
Variable expenses:
Total variable expenses
Contribution margin
Fixed expenses:
Total fixed expenses