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Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,513 per...

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Accounting

Marwick’s Pianos, Inc., purchases pianos from a largemanufacturer for an average cost of $1,513 per unit and then sellsthem to retail customers for an average price of $2,200 each. Thecompany’s selling and administrative costs for a typical month arepresented below:

CostsCost Formula
Selling:
Advertising$962 permonth
Sales salariesand commissions$4,830 per month,plus 5% of sales
Delivery ofpianos to customers$62 per pianosold
Utilities$662 permonth
Depreciation ofsales facilities$5,068 permonth
Administrative:
Executivesalaries$13,579 permonth
Insurance$690 permonth
Clerical$2,539 per month,plus $35 per piano sold
Depreciation ofoffice equipment$942 permonth

During August, Marwick’s Pianos, Inc., sold and delivered 62pianos.

Required:

1. Prepare a traditional format income statement forAugust.
2. Prepare a contribution format income statement for August. Showcosts and revenues on both a total and a per unit basis downthrough contribution margin.

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