O ezto.mheducation.com/hm.tpx Marwick\'s Pianos, Inc., purchases pianos from a l

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O ezto.mheducation.com/hm.tpx Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,490 each from the manufacturer. Marwick's Pianos, Inc., sells the pianos to its customers at an average price of $3,400 each. The selling and administrative costs that the company incurs in a typical month are presented below: Costs Cost Formula Selling Advertising Sales salaries and commissions Delivery of pianos to customers $938 per month $4,809 per month, plus 5% of sales $61 per piano sold $652 per month $4,969 per month Utilities Depreciation of sales facilities Administrativé: Executive salaries Insurance Clerical Depreciation of office equipment $13,411 per month $693 per month $2,468 per month, plus $41 per piano sold $927 per month During August, Marwick's Pianos, Inc., sold and delivered 64 pianos. Required 1. Prepare an income statement for Marwick's Pianos, Inc., for August. Use the traditional format, with costs organized by function. Marwick's Pianos, Inc. Traditional Income Statement For the Month of August Sales Cost of goods sold Selling and administrative expenses: Selling expenses:

Explanation / Answer

Traditional Income statement: Sales revenue (64 units @3400) 217600 Less: Cost of Goods sold (64 units @1490) 95360 Gross Margin 122240 Less: Selling and Admin Expense Selling expense: Advertisement 938 Sales salaries and commisison (4809+5%*217600) 15689 Delivery expense (61*64) 3904 Utilities expense 652 Depreciation on slaes facilities 4969 Admin expense: Executive salaries 13411 Insurance 693 Clerical (41*64+2468) 5092 Depreciation    927 Net Income 75965 Contribution Margin Income Statement Sales revnenue 217600 Less: variable expense Cost f Goods sold 95360 Sales salaries and commission (217600*5%) 10880 Delivery expense 3904 Clerical expense (41*64) 2624 Total Variable cost 112768 Contribution Margin     104832 Fixed expense: Advertising 938 sales salaries    4809 Utilities 652 Depreciation 4969 Executive salaries 13411 Insurance 693 Clerical expense    2468 Depreciation on office equipment 927 Total Fixed cost   28867 Net Operating income 75965

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