Reference no: EM132431319

Problem:

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,497 per unit and then sells them to retail customers for an average price of $2,600 each. The company's selling and administrative costs for a typical month are presented below:

CostsCost FormulaSelling:  Advertising$938 per monthSales salaries and commissions$4,815 per month, plus 4% of salesDelivery of pianos to customers$62 per piano soldUtilities$660 per monthDepreciation of sales facilities$5,052 per monthAdministrative:  Executive salaries$13,416 per monthInsurance$692 per monthClerical$2,501 per month, plus $42 per piano soldDepreciation of office equipment$876 per month

During August, Marwick's Pianos, Inc., sold and delivered 63 pianos.

Required:

1. Make traditional format income statement for August.

2. Solve contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.