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Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $2,450...

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Accounting

Marwicks Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $2,450 per unit and then sells them to retail customers for an average price of $3,125 each. The companys selling and administrative costs for a typical month are presented below:

Costs Cost Formula
Selling:
Advertising $700 per month
Sales salaries and commissions $950 per month, plus 8% of sales
Delivery of pianos to customers $30 per piano sold
Utilities $350 per month
Depreciation of sales facilities $800 per month
Administrative:
Executive salaries $2,500 per month
Insurance $400 per month
Clerical $1,000 per month, plus $ 20 per piano sold
Depreciation of office equipment $300 per month

During August, Marwicks Pianos, Incorporated, sold and delivered 40 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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