Question

Income Statement Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 54,500 units will be produced, with the following total costs: Direct materials 2 Direct labor 74,000 Variable overhead 26,000 Fixed overhead 240,000 Next year, Pietro expects to purchase $122,000 of direct materials Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Work-in-Process Inventory Inventory Beginning $6,000 $14,800 Ending $5.900 $16,800 Next year, Pietro expects to produce 54,500 units and sell 53,800 units at a price of $18.00 each. Beginning inventory of finished goods is $41,500, and ending inventory of finished goods is expected to be $33,000. Total selling expense is projected at $25,000, and total administrative expense is projected at $127,500 Required: 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.5835 and entere as 88.35

Answer 1

Pietro Frozen Foods
Income Statement
			Percent
Sales (53800*18)		968400	100%
Cost of Goods Sold		468600	48%
Gross Margin		499800	52%
Less: Operating Exp.
Sellin g Exp.	25000
Admin Exp.	127500	152500	16%
Operating income		347300	36%

Working Notes:

1.

Computation of Cost of Goods Manufactured
Particulars		Amount
Direct Material Used:
Beginning Raw Material	6000
Add: Raw Material Purchase	122000
Total Raw Material Available	128000
Less: Ending Raw Material	-5900
Total Raw Material Used		122100
Direct Labor		74000
Manuf. OH:
Variable OH	26000
Fixed OH	240000
Total Manuf. OH		266000
Total Manuf. Cost		462100
Add. Opening WIP		14800
		476900
Less: Closing WIP		-16800
Cost of of goods Manufactured		460100

2.

Pietro Frozen Foods
Cost of goods sold
Beginning finished goods inventory	41500
Add: Cost of goods manufactured	460100
Cost of goods available for sales	501600
Less: ending finished goods inventory	-33000
Cost of goods sold	468600