Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next y
ID: 2336607 • Letter: C
Question
Cost of Goods Sold
Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 49,100 units will be produced, with the following total costs:
Direct materials ?
Direct labor 53,000
Variable overhead 25,000
Fixed overhead 185,000
Next year, Pietro expects to purchase $128,000 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 $6,000 $14,000
Ending $5,900 $16,000
Pietro expects to produce 49,100 units and sell 48,400 units. Beginning inventory of finished goods is $47,500, and ending inventory of finished goods is expected to be $39,000.
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 $3,750? What would be the effect on the cost of goods sold?
by $
Explanation / Answer
Solution 1:
Solution 2:
If beginning finished goods inventory decrease by $3,750 then cost of goods sold also decreases by $3,750.
Revised cost of goods sold = $397,600 - $3,750 = $393,850
Pietro Frozen Food Inc. Statement of Cost of goods sold Particulars Amount Direct material consumed: Beginning material inventory $6,000.00 Add: Purchases $128,000.00 Less: Ending material inventory $5,900.00 Direct material consumed $128,100.00 Direct labor $53,000.00 Variable manufacturing overhead $25,000.00 Fixed manufacturing overhead $185,000.00 Manufacturing cost incurred during the period $391,100.00 Add: Beginning Work in Process $14,000.00 Less: Ending Work in Process $16,000.00 Cost of goods manufactured $389,100.00 Add: Beginning finished goods inventory $47,500.00 Cost of goods available for sale $436,600.00 Less: Ending finished goods inventory $39,000.00 Cost of goods sold $397,600.00