Homework SourseMarwicks Pianos Inc purchases pianos from a large manufactur
Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,506 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $3,300 each. The selling and administrative costs that the company incurs in a typical month are presented below:
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.)
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.)
| Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,506 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $3,300 each. The selling and administrative costs that the company incurs in a typical month are presented below: |
Solution
Traditional Income Statement Sales 56*3,300) 184800 Cost of goods sold (56*1,506) 84336 Gross margin 100464 Selling and administrative expense Selling expenses: Advertising 941 Sales salaries and commission (4793+56*184800*5%) 14033 Delivery of pianos (56*59) 3304 Utilities 631 Depreciation of sales facilities 5,060 Total selling expense 23,969 Administrative expenses Executive salaries 13,554 Insurance 720 Clerical (2532+56*42) 4884 Depreciation of office equipment 925 Total administrative expense 20,083 total selling And administrative expense 44,052 Net operating income 56,412 Contribution Format income statement total per piano Sales 184800 3,300 Variable expenses Sales salaries and commission 9240 165 Delivery of pianos 3304 59 Clerical 2352 42 Cost of good sold 84336 1,506 total variable expenses 99232 1772 Contribution margin 85568 1,528 Fixed expenses: Advertising 941 Sales salaries and commission 4,793 Utilities 631 Depreciation of office equipment 925 Depreciation of sales Facilities 5,060 Executive salaries 13,554 insurance 720 clerical 2,532 total fixed expenses 29,156 Net operating income 56,412
