Marwick’s Pianos, Inc., purchases pianos from a largemanufacturer for an average cost of $1,496 per unit and then sellsthem to retail customers for an average price of $2,300 each. Thecompany’s selling and administrative costs for a typical month arepresented below: Costs Cost Formula Selling: Advertising $ 956 permonth Sales salaries and commissions $ 4,828 per month, plus 3% ofsales Delivery of pianos to customers $ 59 per piano sold Utilities$ 640 per month Depreciation of sales facilities $ 5,046 per monthAdministrative: Executive salaries $ 13,522 per month Insurance $697 per month Clerical $ 2,549 per month, plus $41 per piano soldDepreciation of office equipment $ 937 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. Showcosts and revenues on both a total and a per unit basis downthrough contribution margin.
