Managerial Accounting for Managers: AP5-15 House of Organs, Inc., purchases organs (diff version)

Note: This is a variation of the original textbook problem so the numbers/amounts will be different. There are several other versions of this problem where amounts are different - so you need to make sure you take the time to COMPARE your requirements and what is shown in the website/below. However, if you review the solution we provided below, you can follow and understand how the answers were derived by checking the worksheet cell formulas and links as well as the notes and explanations indicated in the solution.

Managerial Accounting for Managers

AP5-15 (a,b)
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.

Required:
1. Prepare an income statement for November using the traditional format with costs organized by function.
2. Redo (1) above, this time using the contribution format with costs organized by behavior. Show costs and revenues on both a total and a per unit basis down through contribution margin.
Powered by