EXERCISE 5-12 (30 MINUTES)

2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
2. MARWICK’S PIANOS, INC. Income Statement For the Month of August

Total Per

Piano

Sales (40 pianos × $3,125 per piano) ... $125,000 $3,125 Less variable expenses: Cost of goods sold (40 pianos × $2,450 per piano) ... 98,000 2,450 Sales commissions (8% × $125,000) ... 10,000 250 Delivery of pianos (40 pianos × $30 per piano)... 1,200 30 Clerical (40 pianos × $20 per piano) ... 800 20 Total variable expenses ... 110,000 2,750 Contribution margin ... 15,000 $ 375 Less fixed expenses: Advertising... 700 Sales salaries ... 950 Utilities ... 350 Depreciation of sales facilities... 800 Executive salaries ... 2,500 Insurance ... 400 Clerical ... 1,000 Depreciation of office equipment ... 300 Total fixed expenses... 7,000 Net operating income ... $ 8,000