arwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,482 per unit and then sells them to retail customers for an average price of $3,100 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 963 per month Sales salaries and commissions $ 4,816 per month, plus 3% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 640 per month Depreciation of sales facilities $ 5,100 per month Administrative: Executive salaries $ 13,519 per month Insurance $ 704 per month Clerical $ 2,471 per month, plus $38 per piano sold Depreciation of office equipment $ 926 per month During August, Marwick’s Pianos, Inc., sold and delivered 58 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.
arwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,482 per unit and then sells them to retail customers for an average price of $3,100 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 963 per month Sales salaries and commissions $ 4,816 per month, plus 3% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 640 per month Depreciation of sales facilities $ 5,100 per month Administrative: Executive salaries $ 13,519 per month Insurance $ 704 per month Clerical $ 2,471 per month, plus $38 per piano sold Depreciation of office equipment $ 926 per month During August, Marwick’s Pianos, Inc., sold and delivered 58 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....
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arwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,482 per unit and then sells them to retail customers for an average price of $3,100 each. The company’s selling and administrative costs for a typical month are presented below:
Costs | Cost Formula | |
Selling: | ||
Advertising | $ | 963 per month |
Sales salaries and commissions | $ | 4,816 per month, plus 3% of sales |
Delivery of pianos to customers | $ | 59 per piano sold |
Utilities | $ | 640 per month |
$ | 5,100 per month | |
Administrative: | ||
Executive salaries | $ | 13,519 per month |
Insurance | $ | 704 per month |
Clerical | $ | 2,471 per month, plus $38 per piano sold |
Depreciation of office equipment | $ | 926 per month |
During August, Marwick’s Pianos, Inc., sold and delivered 58 pianos.
Required:
1. Prepare a traditional format income statement for August.
2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.
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