Income Statement Pietro Frozen Foods, Inc., produces frozen pizzas. For next yea
ID: 2336601 • Letter: I
Question
Income Statement
Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 47,700 units will be produced, with the following total costs:
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:
Next year, Pietro expects to produce 47,700 units and sell 47,000 units at a price of $15.00 each. Beginning inventory of finished goods is $47,500, and ending inventory of finished goods is expected to be $39,000. Total selling expense is projected at $29,000, and total administrative expense is projected at $110,500.
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 .8835 and entered as 88.35.
2. What if the cost of goods sold percentage for the past few years was 57.93 percent? Management's reaction might be:
Direct materials ? Direct labor 58,000 Variable overhead 20,000 Fixed overhead 230,000Explanation / Answer
Note: Schedule of Cost of Goods Manufactured: Beginning Inventory of WIP 10300 Current cost f Manufacturing: Beginning Inventory of RM 4000 Add: Purchases 122000 Total cost of material available for use 126000 Less: Ending inventory of RM 3900 Material Consumed 122100 Direct Labour 58000 Manufacturing OH-Variable 20000 Manufacturing OH-Fixed 230000 Total current cost of manufacturing 430100 Total cost of goods manufacturing 440400 Less: Ending inventory of WIP 12300 Cost of Goods manufactured 428,100 Schedule of Cost of Good ssold: Beginning Inventory of FG 47,500 Add: Cost of Goods manufactured 428,100 Total cost of goods available for sale 475,600 Less: Ending inventory of FG 39000 Cost of Goods sold 436,600 Income Statement: Amount % Sales revennue 705000 100.00% Less:; Cost of goods sold 436600 61.93% Gross Margin 268,400 38.07% Less: Operating expense Selling expenses 29000 4.11% Admin expenses 110,500 15.67% Net Icnome 128,900 18.28% The management is concered for increasing cost of Cost of good sold. It will try to find out the reasons and ways to control the increasing cost.