Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 52,500 units will be produced, with the following total costs: Direct materials? Direct labor 66,000 Variable overhead 18,000 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 $7,000 $13,900 Ending $6,900 $15,900 Pietro expects to produce 52,500 units and sell 51,800 units. The beginning inventory of finished goods is $43,500, and the ending inventory of finished goods is expected to be $35,000.

1. Prepare a statement of cost of goods sold in good form.

2. What if the beginning inventory of finished goods decreased by $3,000? What would be the effect on the cost of goods sold?