Check my wo Marwick\'s Pianos, Inc., purchases pianos from a large manufacturer

Question

Check my wo Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,505 per unit and then sells them to reta customers for an average price of $2,700 each. The company's selling and administrative costs for a typical month are presented below Costs Selling Formula Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities ed $956 per month $4,787 per month, plus 5t of sales $58 per piano sold $631 per month $4,995 per month Administrativei $13,467 per month Executive salaries Insurance clerical Depreciation of office equipment ces $714 per month $2,464 per month, plus $41 per piano sold s901 per month During August, Marwick's Pianos, Inc., 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. Complete this question by entering your answers in the tabs belovw

Explanation / Answer

Solution 1:

Solution 2:

Traditional Income Statement - Marwick Pianos Inc. Particulars Details Amount Sales (2700*64) $172,800.00 Less: Cost of Goods Sold (1505*64) $96,320.00 Gross Profit $76,480.00 Sellling Expenses: Advertising $956.00 Sales Salaries and Commissions (4787 + 5% of 172800) $13,427.00 Delivery of Pianos to customers (58*64) $3,712.00 Utilities $631.00 Depreciation of Sales Facilities $4,995.00 $23,721.00 Administrative Expenses: Executive Salaries $13,467.00 Insurance $714.00 Clerical (2464 + 41*64) $5,088.00 Depreciation of office equipment $901.00 $20,170.00 Net Income $32,589.00

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