Question

Cost of Goods Manufactured Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total costs: Direct materials? Direct labor $52,000 Variable overhead 26,000 Fixed overhead 245,000 Next year, Pietro expects to purchase $125,500 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory Work-in-Process Inventory Beginning $4,000 $12,300 Ending $3,900 $14,300 Required:

1. Prepare a statement of cost of goods manufactured.

2. What if the ending inventory of direct materials increased by $1,200? Indicate the affect that this would have on the items listed below:

Answer 1

1	Cost of goods manufactured	$446,600
	Working
	Raw materials inventory, Beginning	$4,000
	Add: Purchases of raw materials	$125,500
	Total direct materials available	$129,500
	Less: Raw materials inventory, Ending	$3,900
	Total raw materials used in production	$125,600
	Add: Direct Labor	$52,000
	Add: Manufacturing overhead	$271,000
	Total manufacturing costs	$448,600
	Add: Work in process, Beginning	$12,300
		$460,900
	Less: Work in process, Ending	$14,300
	Cost of goods manufactured	$446,600
2	Cost of goods manufactured	$445,400
	Working
	Raw materials inventory, Beginning	$4,000
	Add: Purchases of raw materials	$125,500
	Total direct materials available	$129,500
	Less: Raw materials inventory, Ending	$5,100
	Total raw materials used in production	$124,400
	Add: Direct Labor	$52,000
	Add: Manufacturing overhead	$271,000
	Total manufacturing costs	$447,400
	Add: Work in process, Beginning	$12,300
		$459,700
	Less: Work in process, Ending	$14,300
	Cost of goods manufactured	$445,400