FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
thumb_up100%
Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick's Pianos Inc, sells pianos to its customer at an average price of $3,125 each. The selling and administrative costs that the company incurs in a typical month are presented below:
Costs Cost Formula
Selling:
Advertising $700 per month
Sales salaries asnd commissions $950 per month, plus 8% of sales
Delivery of pianos to customers $30 per piano sold
Utilities $350 per month
Depreciation of sales facilities $800 per month
Administrative:
Executive salaries $2,500 per month
Insurance $400 per month
Clerical $1,000 per month, plus $20 per piano sold
Depreciation of office equipment $300 per month
During August, Marwick's Pianos, Inc., sold and delivered 40 pianos.
Required:
1. Prepare an income statement for Marwick's Pianos, Inc. for August. Use the traditional format, with costs organized by function.
2. Redo (1) above, 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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Marwick’s Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,509 per unit and then sells them to retail customers for an average price of $2,000 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 952 per month Sales salaries and commissions $ 4,776 per month, plus 5% of sales Delivery of pianos to customers $ 63 per piano sold Utilities $ 663 per month Depreciation of sales facilities $ 5,029 per month Administrative: Executive salaries $ 13,453 per month Insurance $ 686 per month Clerical $ 2,480 per month, plus $42 per piano sold Depreciation of office equipment $ 887 per month During August, Marwick’s Pianos, Incorporated, sold and delivered 57 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…arrow_forwardRoyal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 11.00 $ 30.00 Variable expenses per unit $ 2.40 $ 12.00 Traceable fixed expenses per year $ 134,000 $ 30,000 Common fixed expenses in the company total $104,000 annually. Last year the company produced and sold 35,500 units of Weedban and 25,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Company Weedban Greengrow 0 0 0 0 $0 $0 $0arrow_forwardMunoz Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 6,000 and 12,000 trophies per year. The following cost data apply to various activity levels: Required Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. (Round "Cost per unit" answers to 2 decimal places.) Number of Trophies 6,000 8,000 10,000 12,000 Total costs incurred Fixed $ 64,000 Variable 42,000 Total costs $ 106,000 $ Cost per unit Fixed 2$ 10.67 Variable 7.00 Total cost per trophy 24 17.67 0.00 0.00 S 0.00arrow_forward
- Mauro Products distributes a single product, a woven basket whose selling price is $23 per unit and whose variable expense is $16 per unit. The company's monthly fixed expense is $18,200. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.) 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales 3. Break-even point in dollar sales 2,600 baskets basketsarrow_forwardMetlock sells books, movies, and magazines to a wide customer base. In a typical month, about 40% of its sales volume is from books, 40% from movies, and 20% from magazines. The selling price and cost information for each of these product categories is as follows. Selling price Variable cost/unit (a) (b) Books $9 3 Your answer is correct. Books In addition, Metlock incurs facility and administrative costs that average $28,080 per month. eTextbook and Media Movies Movies Weighted-average contribution margin $ Magazines $14 Find the weighted-average contribution margin per unit for this company. (Round answer to 2 decimal places, e.g. 15.25.) Your answer is incorrect. 9 Magazines $5 units 1 Determine how many units from each product category Metlock must sell to break even. (Round answers to O decimals, e.g. 15.) units units 5.2 per unit Attempts: unlimitedarrow_forwardTeam Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of calendars. Of the variable expense, 71% is cost of goods sold, while the remaining 29% relates to variable operating expenses. The company sells each carton of calendars for $13.50. Read the requirements. Requirement 1. Compute the number of cartons of calendars that Team Spirit Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Variable expenses Sales revenue ... The breakeven sales is 106,500 cartons. Fixed expenses Using the basic income statement equation you determined above solve for the number of cartons to break even. = Operating income Requirement 2. Compute the dollar amount of monthly sales Team Spirit Calendars needs in order to earn $304,000 in operating income. Begin by determining the formula. Fixed expenses + Target operating income ( (Round the contribution…arrow_forward
- Mauro Products distributes a single product, a woven basket whose selling price is $19 per unit and whose variable expense is $15 per unit. The company's monthly fixed expense is $11,200. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.) 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales 3. Break-even point in dollar sales baskets basketsarrow_forwardTwo companies are expected to have annual sales of 1,000,000 decks of playing cards next year. Estimates for next year are presented below: Company 1 Company 2 Selling price per deck Cost of paper deck Printing ink per deck $ 3.00 0.62 0.13 $3.00 0.65 Labor per deck 0.75 0.15 1.25 Variable overhead per deck 0.30 0.35 Fixed costs $960.000 $252,000 Given these data, which of the following responses is correct? (In units) A B C. D. Breakeven point for Co. 1 533,334 533,334 800,000 800,000 Breakeven point for Co. 2 105,000 105.000 420.000 420,000 Volume at which profits of Co. 1 and Co. 2 are equal 1,000.000 1.180.000 1,000,000 1,180.000 None B A D C Data concerning NikNik Corporation's activity for the 6 months appear below: Machine Electrical Cost Hours January P3,120 February 4,460 March 3.500 April 5,040 May 2,900 June 3,200 4.000 6.000 4,800 5,800 3.600 4,200 Using the high-low method of analysis, estimate the variable electrical cost per machine hour (nearest centavo).arrow_forwardMauro Products distributes a single product, a woven basket whose selling price is $22 per unit and whose variable expense is $16 per unit. The company's monthly fixed expense is $10,800. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.) 1. Break-even point in unit sales 2. Break-even point in dollar sales baskets 3. Break-even point in unit sales baskets 3. Break-even point in dollar salesarrow_forward
- Mauro Products distributes a single product, a woven basket whose selling price is $21 per unit and whose variable expense is $18 per unit. The company's monthly fixed expense is $4,500. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.) 1. Break-even point in unit sales 2. Break-even point in dollar sales 3. Break-even point in unit sales 3. Break-even point in dollar sales 1,500 baskets basketsarrow_forwardPam-Tees Company plans to sell 11,000 T-shirts at $15 each in the coming year. Product costs include: Direct materials per T-shirt $4.75 Direct labour per T—shirt $2.25 Variable overhead per T- shirt $0.50 Total fixed factory overhead $32,000 Variable selling expense is the redemption of a coupon, which averages $0.70 per T-shirt; fixed selling and administrative expenses total $17,000. Required: Calculate the: 1. Variable product cost per unit 2. Contribution margin ratio (rounded to four significant digits) 3. Total fixed expense for the year 4. Break Even point in quantity (Q) 5. Margin of Safety in Quantity (Q)arrow_forwardMarwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells them to retail customers for an average price of $2,600 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 961 per month Sales salaries and commissions $ 4,799 per month, plus 4% of sales Delivery of pianos to customers $ 60 per piano sold Utilities $ 647 per month Depreciation of sales facilities $ 4,956 per month Administrative: Executive salaries $ 13,422 per month Insurance $ 702 per month Clerical $ 2,456 per month, plus $37 per piano sold Depreciation of office equipment $ 879 per month During August, Marwick’s Pianos, Inc., sold and delivered 56 pianos. Required: 1. Prepare a traditional format income statement for August.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education