Marwick\'s Pianos, Inc., purchases pianos from a large manufacturer and sells th

Question

Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The planos cost, on the average, $1,493 each from the manufacturer, Marwick's Pianos, Inc, sells the pianos to its customers at an average price of $3,200 each. The selling and administrative costs that the company incurs in a typical month are presented below $943 per month $4,829 per month, plus 4% of sales Sales salaries and commissions Delivery of pianos to customers $59 per piano sold Utilies Depreciation of sales facilities $640 per month $5,099 per month Administrative Executive salaries Insurance Clerical Depreciation of office equipment $13,573 per month $684 per month $2,544 per month, plus $40 per piano sold $898 per month During August, Marwick's Planos, Inc, sold and delivered 55 pianos ired: 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.) Traditional Income Statement For the Month of A S 176.000 82,115 93,885 Cost of goods sold Selling and administrative expenses Selling expenses Sales salacies and commissions O Type here to search 6 7 8

Explanation / Answer

Part 1

Marwick's Pianos Inc.

Traditional income statement

For the Month of August

176000

(55*3200)

82115

(55*1493)

11869

(4829+(4%*176000)

3245

(55*59)

4744

(2544+(55*40))

Part 2

Marwick's Pianaos Inc

Contribution format income statement

For the Month of August

176000

(55*3200)

7040

(55*128)

3245

(55*59)

2200

(55*40)

82115

(55*1493)

Sales

176000

(55*3200)

Cost of goods sold

82115

(55*1493)

Gross margin 93885 (176000-82115) Selling and administrative expenses: Selling expenses : Advertising 943 Sales Salaries and commissions

11869

(4829+(4%*176000)

Dilvery of pianos

3245

(55*59)

Utilities 640 Depreciation of sales facilities 5099 Total selling expenses 21796 Administrative expenses : Executive Salaries 13573 Clerical

4744

(2544+(55*40))

Insurance 684 Depreciation on office equipment 898 Total administrative expenses 19899 Total selling and administrative expenses 41695 Net operating income 52190

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