Reference no: EM132596208

Marwick's Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,500 per unit and then sells them to retail customers for an average price of $2,700 each. The company's selling and administrative costs for a typical month are presented below:

Costs Cost Formula

Selling:

Advertising $951 per month

Sales salaries and commissions $4,821 per month, plus 4% of sales

Delivery of pianos to customers $61 per piano sold

Utilities $667 per month

Depreciation of sales facilities $4,962 per month

Administrative:

Executive salaries $13,478 per month

Insurance $694 per month

Clerical $2,509 per month, plus $35 per piano sold

Depreciation of office equipment $868 per month

During August, Marwick's Pianos, Inc., sold and delivered 62 pianos.

Required:

Question 1. Prepare traditional format income statement for August.

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