hw ch2.3 Marwicks Pianos, Inc., purchases pianos from a large manufacturer and sells them at...
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Accounting
hw ch2.3
Marwicks Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,481 each from the manufacturer. Marwicks Pianos, Inc., sells the pianos to its customers at an average price of $3,300 each. The selling and administrative costs that the company incurs in a typical month are presented below:
Costs
Cost Formula
Selling:
Advertising
$
948 per month
Sales salaries and commissions
$
4,827 per month, plus 4% of sales
Delivery of pianos to customers
$
62 per piano sold
Utilities
$
650 per month
Depreciation of sales facilities
$
5,096 per month
Administrative:
Executive salaries
$
13,500 per month
Insurance
$
701 per month
Clerical
$
2,483 per month, plus $39 per piano sold
Depreciation of office equipment
$
882 per month
During August, Marwicks Pianos, Inc., sold and delivered 57 pianos.
Required:
1. Prepare an income statement for Marwicks Pianos, Inc., for August. Use the traditional format, with costs organized by function. (A "Net operating loss" should be entered as a negative number.)
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