Reference no: EM132586981

House of Organs, Inc., purchases organs from a well-known manufacturer and sells them at the retail level. The organs sell, on the average, for $2,500 each. The average cost of an organ from the manufacturer is $1,500.

The costs that the company incurs in a typical month are presented below:

Costs Cost Formula Selling:

Advertising $950 per month

Delivery of organs $60 per organ sold

Sales salaries and commissions $4,800 per month, plus 4% of sales

Utilities $650 per month

Depreciation of sales facilities $5,000 per month

Administrative:

Executive salaries $13,500 per month

Depreciation of office equipment $900 per month

Clerical $2,500 per month, plus $40 per organ sold

Insurance $700 per month

During November, the company sold and delivered 60 organs.

Instructions:

Question 1. Prepare a traditional income statement for November with costs organized by function.

Question 2. Prepare income statement using the contribution format with costs orgnaised by behavior