Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,488...
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Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,488 per unit and then sells them to retail customers for an average price of $2,100 each. The companys selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $948 per month Sales salaries and commissions $4,797 per month, plus 4% of sales Delivery of pianos to customers $61 per piano sold Utilities $651 per month Depreciation of sales facilities $4,959 per month Administrative: Executive salaries $13,443 per month Insurance $717 per month Clerical $2,479 per month, plus $45 per piano sold Depreciation of office equipment $853 per month During August, Marwicks Pianos, Incorporated, sold and delivered 64 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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