advertising 936 per month sales salaries and commision 4811

advertising $936 per month

sales salaries and commision $4,811 per month plus 6% of sales

delivery of pianos to customers $57 per sold piano

utilities $638 per month

depreciation of sales facilities $4983 per month

administrative:

executives salaries $13496 per month

insurance $719 per month

clerical $2458 per month plus $40 per piano sold

depreciation of office equipment $910 per month

3:04 PM ezto.mheducation.com T-Mobile LTE 77% Marwick\'s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,498 each from the manufacturer Marwick\'s Pianos, Inc., sells the pianos to its customers at an average price of $2,400 each. The selling and administrative costs that the company incurs in a typical month are presented below 13498 per n During August, Marwick\'s Pianos, Inc., sold and delivered 58 planos. Required: 1. 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.) 2. 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.)

Solution

1) Income statement as per traditional format :

2) Income statement as per Variable or Contribution format :

Sales 58 pianos * 2400	$139200
Less: COGS 58*1498	-86884
Gross Profits	$52316
Less: Expenses:
Selling expenses:
Advertising	936
sales salaries and commission (4811+8352)	13163
Delivery costs 57*58	3306
Utility	638
Depreciation - utilities	4983
Total Selling costs	23026
Income before admis expenses:	29290
Less: Administrative expenses :
executive salary	13496
insurance	719
clerical (2458+2320)	4778
Depreciation - office equipment	910
Total Administration costs =	19903
Net Operating Income	$9387