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Question: marwicks pianos inc purchases pianos from a large manufacturer for...

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Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,504 per unit and then sells them to retail customers for an average price of $2,400 each. The company’s selling and administrative costs for a typical month are presented below:

Costs Cost Formula
Selling:
Advertising $ 961 per month
Sales salaries and commissions $ 4,818 per month, plus 3% of sales
Delivery of pianos to customers $ 57 per piano sold
Utilities $ 647 per month
Depreciation of sales facilities $ 4,958 per month
Administrative:
Executive salaries $ 13,511 per month
Insurance $ 690 per month
Clerical $ 2,463 per month, plus $35 per piano sold
Depreciation of office equipment $ 877 per month

During August, Marwick’s Pianos, Inc., sold and delivered 56 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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