Cornerstone Exercise 2.4 (Algorithmic) Income Statement

Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 49,900 units will be produced, with the following total costs:

Direct materials	?
Direct labor	72,000
Variable overhead	30,000
Fixed overhead	200,000

Next year, Pietro expects to purchase $129,000 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	$10,500
Ending	$5,900	$12,500

Next year, Pietro expects to produce 49,900 units and sell 49,200 units at a price of $18.00 each. Beginning inventory of finished goods is $40,500, and ending inventory of finished goods is expected to be $32,000. Total selling expense is projected at $27,500, and total administrative expense is projected at $124,000.

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. Pietro Frozen Foods, Inc. Income Statement For the Coming Year Percent Sales S 885600 100% 45.18 * Cost of goods sold 400100 Gross margin 485500 54.82% Less operating expenses: Selling expenses $ 27500 24000 Administrative expenses Administrative expenses 0 _ 151500 27.11 8 334000 Operating income 37.71 %