Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail...


Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $1,494 each from the manufacturer. Marwick's Pianos, Inc., sells the pianos to its customers at an average price of $2,600 each. The selling and administrative costs that the company incurs in a typical month are presented below:

Costs Cost Formula
Advertising $949 per month
Sales salaries and commissions $4,773 per month, plus 3% of sales
Delivery of pianos to customers $59 per piano sold
Utilities $637 per month
Depreciation of sales facilities $5,034 per month
Executive salaries $13,435 per month
Insurance $697 per month
Clerical $2,454 per month, plus $35 per piano sold
Depreciation of office equipment $890 per month


Prepare an income statement for Marwick's Pianos, Inc., for August. Use the traditional format, with costs organized by function.

Cost of Goods Sold:

Cos of goods sold accounts for the total manufacturing cost of all goods distributed to customers and are being sold.The cost of goods sold for a manufacturing company also accounts for the work in process goods and the finished goods.

Answer and Explanation:

Marwick's Oianos, Inc.

Income Statement

Sales 2,600
Cost of Goods Sold -1,494
Gross Margin 1,106
Selling Expense:
Advertising -949
Sales Salaries and Commissions -4,851
Delivery Charge -59
Utilities -637
Depreciation -5,034
Administrative Expenses:
Executive Salaries -14,435
Insurance -697
Clerical -2,489
Depreciation -890
Net Income (Net Loss)-28,935

Since there are no number of units sold given, the writer just assumed one unit of sales.

Learn more about this topic:

Operations of an Income Statement

from Accounting 101: Financial Accounting

Chapter 8 / Lesson 5

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