Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next y
ID: 2337142 • 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:
From the given data we need to find question 1 and 2. These calculations are explained below,
Answer 1:
Pietro Frozen Foods, inc.
Statement of cost of goods sold for the coming year.
Answer 2:
If the beginning inventory of finished goods decreased by $3,750 then cost of goods sold also decreases by $3,750.
Revised cost of goods sold = $397,600 - $3,750 = $393,850
Particulars Amount Consumed direct materials: Material inventory beginning $6,000 Add: Purchases $128,000 Less: Material ending inventory ($5,900) Direct materials consumed $128,100 Direct labour $53,000 Fixed manufacturing overhead $185,000 Variable manufacturing overhead $25,000 Manufacturing cost incurred during the period $391,100 Add: Work in process beginning $14,000 Less: Work in process ending ($16,000) Cost of goods manufactured $389,100 Add: Finished goods inventory beginning $47,500 Cost of goods available for sale $436,600 Less: Finished goods inventory ending (39,000) Cost of goods sold $397,600