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1-14B Contribution Format versus Traditional Income Statement (LO5)
CHECK FIGURE
(2) Net operating income: $65,674
House of Pianos, Inc., purchases pianos from a well-known manufacturer and sells them at the retail level. The pianos sell, on the average, for $3,300 each. The average cost of an piano from the manufacturer is $1,492. The costs that the company incurs in a typical month are presented below:
|Costs |Cost Formula |
|Selling: | |
| Advertising ......................................... |$955 per month |
| Delivery of pianos ............................... |$61 per piano sold |
| Sales salaries and commissions............. |$4,823 per month, plus 4% of sales |
| Utilities ............................................... |$633 per month |
| Depreciation of sales facilities .............. |$4,944 per month |
|Administrative: | |
| Executive salaries ................................ |$13,490 per month |
| Depreciation of office equipment .......... |$943 per month |
| Clerical ............................................... |$2,499 per month, plus $37 per piano sold
CHECK FIGURE
(2) Net operating income: $65,674
House of Pianos, Inc., purchases pianos from a well-known manufacturer and sells them at the retail level. The pianos sell, on the average, for $3,300 each. The average cost of an piano from the manufacturer is $1,492. The costs that the company incurs in a typical month are presented below:
|Costs |Cost Formula |
|Selling: | |
| Advertising ......................................... |$955 per month |
| Delivery of pianos ............................... |$61 per piano sold |
| Sales salaries and commissions............. |$4,823 per month, plus 4% of sales |
| Utilities ............................................... |$633 per month |
| Depreciation of sales facilities .............. |$4,944 per month |
|Administrative: | |
| Executive salaries ................................ |$13,490 per month |
| Depreciation of office equipment .......... |$943 per month |
| Clerical ............................................... |$2,499 per month, plus $37 per piano sold