Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 51,100 units will be
Question:
Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 51,100 units will be produced, with the following total costs:
Direct materials ? Direct labor $60,000 Variable overhead 25,000 Fixed overhead 220,000 Next year, Pietro expects to purchase $119,300 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows:
Direct Materials
InventoryWork-in-Process
InventoryBeginning $5,600 $12,500 Ending 4,900 14,600 Next year, Pietro expects to produce 51,100 units and sell 50,400 units at a price of $12.00 each. Beginning inventory of finished goods is $42,500, and ending inventory of finished goods is expected to be $34,000. Total selling expense is projected at $26,000, and total administrative expense is projected at $134,000.
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.
Note: due to rounding, percentages may not add down.
2. What if the cost of goods sold percentage for the past few years was 65 percent? Management's reaction might be:
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen