How can I resolve this problem?Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,481 per unit and then sells them to retail customers for an average price of $3,400 each. The company’s selling and administrative costs for a typical month are presented below: CostsCost FormulaSelling: Advertising$930 per monthSales salaries and commissions$4,803 per month, plus 4% of salesDelivery of pianos to customers$63 per piano soldUtilities$649 per monthDepreciation of sales facilities$4,913 per monthAdministrative: Executive salaries$13,575 per monthInsurance$711 per monthClerical$2,516 per month, plus $37 per piano soldDepreciation of office equipment$885 per month During August, Marwick’s Pianos, Inc., sold and delivered 63 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.

The traditional income statement is simply deducted all the expenses from the revenue, on the other…

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

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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How can I resolve this problem?

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,481 per unit and then sells them to retail customers for an average price of $3,400 each. The company’s selling and administrative costs for a typical month are presented below:

Costs	Cost Formula
Selling:
Advertising	$	930 per month
Sales salaries and commissions	$	4,803 per month, plus 4% of sales
Delivery of pianos to customers	$	63 per piano sold
Utilities	$	649 per month
Depreciation of sales facilities	$	4,913 per month
Administrative:
Executive salaries	$	13,575 per month
Insurance	$	711 per month
Clerical	$	2,516 per month, plus $37 per piano sold
Depreciation of office equipment	$	885 per month

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