Traditional format, with costs organized by function

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Reference no: EM13929407

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,488 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $2,900 each. The selling and administrative costs that the company incurs in a typical month are presented below:

 Costs

  Cost Formula

  Selling:

 

       Advertising

  $942 per month

       Sales salaries and commissions

  $4,799 per month, plus 3% of sales

       Delivery of pianos to customers

  $60 per piano sold

       Utilities

  $650 per month

       Depreciation of sales facilities

  $4,945 per month

  Administrative:

 

       Executive salaries

  $13,566 per month

       Insurance

  $685 per month

       Clerical

  $2,480 per month, plus $36 per piano sold

       Depreciation of office equipment

  $900 per month

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

Required:

1.Prepare an income statement for Marwick’s Pianos, Inc., for August. Use the traditional format, with costs organized by function. (A "Net operating loss" should be entered as a negative number.)

2.Prepare an income statement for Marwick’s Pianos, Inc., for August, this time using the contribution format, with costs organized by behavior. Show costs and revenues on both a total and a per unit basis down through contribution margin. (A "Net operating loss" should be entered as a negative number.)

Reference no: EM13929407

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