Answer:
Instructions are listed below
Explanation:
Giving the following information:
The pianos cost, on the average, $2,450 each from the manufacturer. Marwick's Pianos Inc, sells pianos to its customer at an average price of $3,125 each.
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.
1) Traditional format:
Revenue= 40* 3125= 125,000
Cost of goods sold= 2450*40= 98000 (-)
Gross profit= 27,000
Selling expense:
Advertising= 700
Fixed Sales salaries and commissions= 950
Variable Sales salaries and commissions= 0.08*125000= 10,000
Delivery of pianos to customers= 30*40= 1200
Utilities= 350
Depreciation of sales facilities= 800
Total= 14,000 (-)
Administrative:
Executive salaries= 2,500
Insurance= 400
Fixed Clerical= 1,000
Variable Clerical= 20*40= 800
Depreciation of office equipment= 300
Total= 5,000 (-)
Net operating profit= 8,000
2) Contribution format:
Revenue= 125,000
Cost of goods sold= 98000 (-)
Variable Sales salaries and commissions= 10,000 (-)
Delivery of pianos to customers= 1200 (-)
Variable Clerical= 800 (-)
Contribution Margin= 15,000
Fixed costs:
Advertising= 700
Fixed Sales salaries and commissions= 950
Utilities= 350
Depreciation of sales facilities= 800
Total= 2800 (-)
Executive salaries= 2,500
Insurance= 400
Fixed Clerical= 1,000
Depreciation of office equipment= 300
Total= 4,200 (-)
Total fixed costs= 7000 (-)
Net operating profit= 8000
