Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,506...
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Marwicks Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,506 per unit and then sells them to retail customers for an average price of $2,700 each. The companys selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 967 per month Sales salaries and commissions $ 4,806 per month, plus 3% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 633 per month Depreciation of sales facilities $ 4,945 per month Administrative: Executive salaries $ 13,555 per month Insurance $ 684 per month Clerical $ 2,549 per month, plus $39 per piano sold Depreciation of office equipment $ 879 per month During August, Marwicks Pianos, Inc., sold and delivered 63 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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