Cost of Goods Manufactured 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 $52,000 Variable overhead 26,000 Fixed overhead 245,000 Next year, Pietro expects to purchase $125,500 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 $4,000 $12,300 Ending $3,900 $14,300 Required:

1. Prepare a statement of cost of goods manufactured.

2. What if the ending inventory of direct materials increased by $1,200? Indicate the affect that this would have on the items listed below: