2.
|
Marwick’s Pianos, Inc., purchases
pianos from a large manufacturer and sells them at the retail level. The
pianos cost, on the average, $2,450 each from the manufacturer. Marwick’s
Pianos, Inc., sells the pianos to its customers at an average price of $3,125
each. The selling and administrative costs that the company incurs in a
typical month are presented below:
|
|
Costs
|
Cost Formula
|
|
Selling:
|
|
|
Advertising
|
$700 per month
|
|
Sales
salaries and commissions
|
$950 per month, plus
8% of sales
|
|
Delivery
of pianos to customers
|
$30 per piano sold
|
|
Utilities
|
$350 per month
|
|
Depreciation
of sales facilities
|
$800 per month
|
|
Administrative:
|
|
|
Executive
salaries
|
$2,500 per month
|
|
Insurance
|
$400 per month
|
|
Clerical
|
$1,000 per month, plus
$20 per piano sold
|
|
Depreciation
of office equipment
|
$300 per month
|
|
|
|
|
During August, Marwick’s Pianos,
Inc., sold and delivered 40 pianos.
|
|
Required:
|
|||
|
1.
|
Prepare an income statement for Marwick’s
Pianos, Inc., for August. Use the traditional format, with costs organized by
function.
|
||
|
1.
|
|
Sales: (40 pianos × $3,125 per
piano) = $125,000
|
|
Cost of goods sold: (40 pianos ×
$2,450 per piano) = $98,000
|
|
Sales salaries and commissions: [$950
+ (8% × $125,000)] = $10,950
|
|
Delivery of pianos: (40 pianos ×
$30 per piano) = $1,200
|
|
Clerical: [$1,000 + (40 pianos ×
$20 per piano)] = $1,800
|
|
|
|
2.
|
|
Sales: (40 pianos × $3,125 per
piano) = $125,000
|
|
Cost of goods sold: (40 pianos ×
$2,450 per piano) = $98,000
|
|
Sales commissions: (8% × $125,000)
= $10,000
|
|
Delivery of pianos: (40 pianos ×
$30 per piano) = $1,200
|
|
Clerical: (40 pianos × $20 per
piano) = $800
|
No comments:
Post a Comment