Question

Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 49,300 units will be produced, with the following total costs:

Direct materials	?
Direct labor	59,000
Variable overhead	21,000
Fixed overhead	190,000

Next year, Pietro expects to purchase $120,500 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	$5,000	$12,200
Ending	$4,900	$14,200

Pietro expects to produce 49,300 units and sell 48,600 units. Beginning inventory of finished goods is $39,500, and ending inventory of finished goods is expected to be $31,000.

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 $4,500? What would be the effect on the cost of goods sold?
  by $

Answer 1

Solution:

1. Below is the statement of Cost of Good Manufactured:

2.If begining inventory of finished goods is decreased by $4,500 then effect on cost of good sold will be:

Therfore cost of good sold will be decreased by 397,100 - 392,600 = 4500