Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
Question
Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,514 per unit and then sells them to
retail customers for an average price of $2,400 each. The company's selling and administrative costs for a typical month are presented
below:
Costs
Selling:
Advertising
Sales salaries and commissions
Delivery of pianos to customers
Utilities
Depreciation of sales facilities
Administrative:
Executive salaries
Insurance
Clerical
Depreciation of office equipment
Cost Formula
$932 per month
$4,782 per month, plus 5% of sales
$58 per piano sold
$667 per month
$5,051 per month
$13,447 per month
$683 per month
$2,454 per month, plus $36 per piano sold
$948 per month
During August, Marwick's Pianos, Incorporated, sold and delivered 65 pianos.
Required:
1. Prepare a traditional format income statement for August.
2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per-unit basis down
through contribution margin.
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Transcribed Image Text:Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,514 per unit and then sells them to retail customers for an average price of $2,400 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Insurance Clerical Depreciation of office equipment Cost Formula $932 per month $4,782 per month, plus 5% of sales $58 per piano sold $667 per month $5,051 per month $13,447 per month $683 per month $2,454 per month, plus $36 per piano sold $948 per month During August, Marwick's Pianos, Incorporated, sold and delivered 65 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per-unit basis down through contribution margin.
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