Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next y
ID: 2336606 • Letter: C
Question
Cost of Goods Sold
Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 52,000 units will be produced, with the following total costs:
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:
Pietro expects to produce 52,000 units and sell 51,300 units. Beginning inventory of finished goods is $40,500, and ending inventory of finished goods is expected to be $32,000.
Required:
1. Prepare a statement of cost of goods sold in good form.
2. What if the beginning inventory of finished goods decreased by $3,000? What would be the effect on the cost of goods sold?
by $
Explanation / Answer
Direct material used = 5000+125500-4900 = 125600
Total manufacturing cost = 125600+69000+22000+195000 = 411600
Cost of goods manufactured = 411600+10000-12000 = 409600
2) Cost of goods sold (37500+409600-32000) = $415000
So Cost of goods sold decrease by $3000
Pietro Frozen Foods, Inc. Statement of Cost of Goods Sold For the Coming Year Beginning finished goods inventory 40500 Add: Cost of goods manufactured 409600 Cost of goods available for sale 450100 Less: Ending finished goods inventory -32000 Cost of goods sold 418100