Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells the

Question

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,497 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $2,200 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,497 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its customers at an average price of $2,200 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Marwick's Pianos, Inc Contribution Format Income Statement For the Month of August Total Per Piano Variable expenses: Total variable expenses Contribution margin Fixed expenses: Total fixed expenses

Explanation / Answer

TOTAL PER PIANO SALES 123200 2200 VARIABLE EXPENSES PIANO COST 83832 1497 SALES SALARY AND COMMISSIONS 6160 110 DELIVERY OF PIANOS 3472 62 CLERICAL 2296 41 TOTAL VARIABLE EXPENSES 95760 1710 CONTRIBUTION MARGIN 27440 490 FIXED EXPENSES ADVERTISING 944 SALES SALARY AND COMMISSIONS 4821 UTILITIES 672 DEPRECIATION 4977 EXECUTIVE SALARY 13401 INSURANCE 690 CLERICAL 2529 DEPRECIATION OF OFFICE EQUIPMENT 917 TOTAL FIXED EXPENSES 28951 NET INCOME -1511

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