Marwick’s Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,489 per unit and then sells them to retail customers for an average price of $3,400 each. The company’s selling and administrative costs for a typical month are presented below:


Costs Cost Formula

Selling:

Advertising $964 per month

Sales salaries and commissions $4,787 per month, plus 5% of sales

Delivery of pianos to customers $63 per piano sold

Utilities $654 per month

Depreciation of sales facilities $4,927 per month

Administrative:

Executive salaries $13,552 per month

Insurance $717 per month

Clerical $2,481 per month, plus $41 per piano sold

Depreciation of office equipment $885 per month



During August, Marwick’s Pianos, Incorporated, sold and delivered 63 pianos.


Required:

a. Prepare a traditional format income statement for August.

b. 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.