Question

Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 52,400 units will be produced, with the following total costs: Direct materials? Direct labor 53,000 Variable overhead 17,000 Fixed overhead 250,000 Next year, Pietro expects to purchase $115,000 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 $12,700 Ending $3,900 $14,700 Next year, Pietro expects to produce 52,400 units and sell 51,700 units at a price of $16.00 each. The beginning inventory of finished goods is $43,500, and the ending inventory of finished goods is expected to be $35,000. Total selling expense is projected at $27,000, and total administrative expense is projected at $126,500.  

1. Prepare an income statement in good form. Round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.

2. What if the cost of goods sold percentage for the past few years was 49.38 percent? Management's reaction might be:

Answer 1

Answey- Caleulation & Income salement. cost sheet Awaunt Auount particulars Divect Materials:- Beginning Inu Add- purehases 'Materials Available Lesss Euding Iuveulory Direct naterialswed in produetion Divect LaboY Manufactaring overhead Iuventory $ 4,000 $115,000 $119,000 |($ 3900) $115,100 $53,000 $267,000 [B17.000+$252.000 $435100 $12,700 4 14,700) $433100 $43,500 635000) $441600 Toltal Manefactaviug costa added Add- Beginning workin proceso Ending work in process ఆక cost of goods Mancufackured Add:- Beginniug finiehed goods Lesgt Ending finished goods Cost & goods sold. Income sateument particubrs Sales G1700 unio x †16) Lesst cost 4 goods sold Gvogs psofit Less- Operatiug expenses- Selling eapeuee Administra hve eapense Total operatinga expense Amount Amant $827200 441,600) $3రం $126500 $153500) $232,100 Net Income cost & goods Reld perceuloge. e) calculatou f cost of goods seld perceutige = (Cost & goods seld/sales]ul00 44L600/s227200] »00 :, Cost f goods sold perceulage = 53.38% . The Mauagemeut cwill not be happy have increaped there by vedeicing the profi5.