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Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells them to retail customers for an average price of $2,600 each. The company’s selling and administrative costs for a typical month are presented below:
Costs | Cost Formula | |
Selling: | ||
Advertising | $ | 961 per month |
Sales salaries and commissions | $ | 4,799 per month, plus 4% of sales |
Delivery of pianos to customers | $ | 60 per piano sold |
Utilities | $ | 647 per month |
$ | 4,956 per month | |
Administrative: | ||
Executive salaries | $ | 13,422 per month |
Insurance | $ | 702 per month |
Clerical | $ | 2,456 per month, plus $37 per piano sold |
Depreciation of office equipment | $ | 879 per month |
During August, Marwick’s Pianos, Inc., sold and delivered 56 pianos.
Required:
1. Prepare a traditional format income statement for August.
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- Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?
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- Marwick’s Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,508 per unit and then sells them to retail customers for an average price of $2,800 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 961 per month Sales salaries and commissions $ 4,802 per month, plus 5% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 667 per month Depreciation of sales facilities $ 5,049 per month Administrative: Executive salaries $ 13,433 per month Insurance $ 696 per month Clerical $ 2,513 per month, plus $37 per piano sold Depreciation of office equipment $ 877 per month During August, Marwick’s Pianos, Incorporated, sold and delivered 55 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…Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of S 1,507 per unit and then sells them to retail customers for an average price of $2,600 each. The company's selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $937 per month Sales salaries and commissions $4,790 per month, plus 5% of sales Delivery of pianos to customers $61 per piano sold Utilities $645 per month Depreciation of sales facilities $5,027 per month Administrative: Executive salaries $13,534 per month Insurance $710 per month Clerical $2,535 per month, plus $41 per piano sold Depreciation of office equipment $928 per month During August, Marwick's Pianos, Incorporated, sold and delivered 63 pianos. Required: Prepare a traditional format income statement for August. 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.Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,499 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 $ 948 per month Sales salaries and commissions $ 4,782 per month, plus 4% of sales Delivery of pianos to customers $ 57 per piano sold Utilities $ 664 per month Depreciation of sales facilities $ 4,905 per month Administrative: Executive salaries $ 13,450 per month Insurance $ 704 per month Clerical $ 2,469 per month, plus $44 per piano sold Depreciation of office equipment $ 928 per month During August, Marwick’s Pianos, Inc., sold and delivered 61 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…