Question

Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,900 units will be produced, with the following total costs: Direct materials Direct labor Variable overhead Fixed overhead 51,000 19,000 225,000 Next year, Pietro expects to purchase $121,500 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory $5,000 $4,900 Work-in-Process Inventory $13,400 $15,400 Beginning Ending Pietro expects to produce 50,900 units and sell 50,200 units. Beginning inventory of finished goods is $43,500, and ending inventory of finished goods is expected to be $35,000. Required: 1. Prepare a statement of cost of goods sold in good form. Pietro Frozen Foods, Inc. Statement of Cost of Goods Sold For the Coming Year 2. What if the beginning inventory of finished goods decreased by $5,000? What would be the effect on the cost of goods sold? by $ increase decrease no change

Answer 1

Solution 1:

Pietro Frozen Foods Inc.
Statement of cost of goods Manufactured
for the coming year
Particulars		Amount
Direct materials:
Beginning direct material inventory	$5,000.00
Add: Purchase of direct materials	$121,500.00
Total materials available	$126,500.00
Less: Ending direct materials inventory	$4,900.00
Direct materials used		$121,600.00
Direct labor		$51,000.00
Factory overhead		$244,000.00
Total manufacturing costs		$416,600.00
Add: Beginning Work in Process		$13,400.00
Total cost of work in process		$430,000.00
Less: Ending work in process		$15,400.00
Cost of goods manufactured		$414,600.00

Pietro Frozen Foods Inc.
Statement of cost of goods sold
for the coming year
Particulars	Amount
Beginning finished goods inventory	$43,500.00
Add: Cost of goods manufactured	$414,600.00
Cost of goods available for sale	$458,100.00
Less: ending finished goods inventory	$35,000.00
Cost of goods sold	$423,100.00

Solution 2:

If beginning inventory of finished goods decreases by $5,000, cost of goods sold decreases by $5,000