Question

In: Accounting

Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts...

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 $

Solutions

Expert Solution

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.

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
Cost of goods sold = $397,600

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

Revised cost of goods sold = $393,850

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