Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,499...
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Accounting
Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells them to retail customers for an average price of $2,900 each. The companys selling and administrative costs for a typical month are presented below:
Costs
Cost Formula
Selling:
Advertising
$956 per month
Sales salaries and commissions
$4,773 per month, plus 4% of sales
Delivery of pianos to customers
$60 per piano sold
Utilities
$640 per month
Depreciation of sales facilities
$4,972 per month
Administrative:
Executive salaries
$13,483 per month
Insurance
$712 per month
Clerical
$2,505 per month, plus $42 per piano sold
Depreciation of office equipment
$907 per month
During August, Marwicks Pianos, Incorporated, sold and delivered 60 pianos.
Required:
1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.
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