House of Organs, Inc., purchases organs from a well-known manufacturer and sells

House of Organs, Inc., purchases organs from a well-known manufacturer and sells them at the retail level. The organs sell, on the average, for $3,000 each. The average cost of an organ from the manufacturer is $1,508. The costs that the company incurs in a typical month are presented below:

Costs       Cost Formula
Selling:
Advertising       $962 per month
Delivery of organs       $57 per organ sold
Sales salaries and commissions       $4,783 per month, plus 5% of sales
Utilities       $639 per month
Depreciation of sales facilities       $5,098 per month
Administrative:
Executive salaries       $13,481 per month
Depreciation of office equipment       $890 per month
Clerical       $2,550 per month, plus $41 per organ sold
Insurance       $718 per month

During November, the company sold and delivered 60 organs.

Prepare a traditional income statement for November.

Prepare a contribution format income statement for November.

Here’s the SOLUTION

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