2. CEX.02.04 Income Statement Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 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 Work-in-Process Inventory Inventory Beginning Ending $5,600 $12,500 4,900 14,600 Next year, Pietro expects to produce 50,000 units and sell 49,300 units at a price of $12.50 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. Pietro Frozen Foods, Inc. Income Statement For the Coming Year Less operating expenses: Percent % % % % % 2. What if the cost of goods sold percentage for the past few years was 65 percent? Management's reaction might be