Marwick\'s Pianos, Inc., purchases pianos from a large manufacturer and sells th
ID: 2545910 • Letter: M
Question
Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,519 each from the manufacturer. Marwick's Pianos, Inc., sells the pianos to its customers at an average price of $2,300 each. The selling and administrative costs that the company incurs in a typical month are presented below: Costs Cost Formula Seling Sales salaries and commiss ons Doivery of pianos to customers Utilitios Doprociation of sales facilitos $930 per month $4,784 per month, plus 6% of sales $80 per plano sold $867 per month $5,032 por month Administrativa: Executive salaries Insurance Clerical Depreciation of office equipment $13,527 per month $702 per month $2,523 per month, plus $40 per piano sold $934 per month During August, Marwick's Pianos, Inc., sold and delivered 64 pianos. Required: 1. Prepare an income statement for Marwick's Planos, Inc., for August. Use the traditional format, with costs organized by function. (A "Net oporating loss" should be enterod as a nogative number.) Marwick's Pianos, Inc. r the Month of Selling and administrative expenses: Seling expensos: Total selling expens0S Total selling and administrative expensesExplanation / Answer
Answer
Units
per unit ($)
Amount ($)
Sales
64
$ 2,300.00
$ 1,47,200.00
Cost of Goods Sold
64
$ 1,519.00
$ 97,216.00
Gross Margin
64
$ 781.00
$ 49,984.00
Selling & Administrative expenses
Selling Expenses:
Advertising
$ 930.00
Sales Salaries & Commission
$ 4,784.00
Sales Salaries & Commission (Variable)
64
$ 138.00
$ 8,832.00
Delivery of pianos to customers
64
$ 60.00
$ 3,840.00
Utilities
$ 667.00
Depreciation of sales facilities
$ 5,032.00
Total Selling expenses
$ 24,085.00
Administrative expenses:
Executive salaries
$ 13,527.00
Insurance
$ 702.00
Clerical
$ 2,523.00
Clerical (Variable)
64
$ 40.00
$ 2,560.00
Depreciation of office equipment
$ 934.00
Total administrative expenses
$ 20,246.00
Total Selling & Administrative expenses
$ 44,331.00
Net Income
$ 5,653.00
Total ($)
per Piano ($)
Sales
$ 1,47,200.00
$ 2,300.00
Variable expenses:
Cost of Goods Sold
$ 97,216.00
$ 1,519.00
Sales Salaries & Commission (Variable)
$ 8,832.00
$ 138.00
Delivery of pianos to customers
$ 3,840.00
$ 60.00
Clerical (Variable)
$ 2,560.00
$ 40.00
Total Variable expenses
$ 1,12,448.00
$ 1,757.00
Contribution Margin
$ 34,752.00
$ 543.00
Fixed Expenses:
Advertising
$ 930.00
Sales Salaries & Commission
$ 4,784.00
Utilities
$ 667.00
Depreciation of sales facilities
$ 5,032.00
Executive salaries
$ 13,527.00
Insurance
$ 702.00
Clerical
$ 2,523.00
Depreciation of office equipment
$ 934.00
Total Fixed expenses
$ 29,099.00
Net Income
$ 5,653.00
Units
per unit ($)
Amount ($)
Sales
64
$ 2,300.00
$ 1,47,200.00
Cost of Goods Sold
64
$ 1,519.00
$ 97,216.00
Gross Margin
64
$ 781.00
$ 49,984.00
Selling & Administrative expenses
Selling Expenses:
Advertising
$ 930.00
Sales Salaries & Commission
$ 4,784.00
Sales Salaries & Commission (Variable)
64
$ 138.00
$ 8,832.00
Delivery of pianos to customers
64
$ 60.00
$ 3,840.00
Utilities
$ 667.00
Depreciation of sales facilities
$ 5,032.00
Total Selling expenses
$ 24,085.00
Administrative expenses:
Executive salaries
$ 13,527.00
Insurance
$ 702.00
Clerical
$ 2,523.00
Clerical (Variable)
64
$ 40.00
$ 2,560.00
Depreciation of office equipment
$ 934.00
Total administrative expenses
$ 20,246.00
Total Selling & Administrative expenses
$ 44,331.00
Net Income
$ 5,653.00
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