Income Statement

Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 48,600 units will be produced, with the following total costs:

Direct materials	?
Direct labor	74,000
Variable overhead	28,000
Fixed overhead	195,000

Next year, Pietro expects to purchase $121,000 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	$7,000	$12,700
Ending	$6,900	$14,700

Next year, Pietro expects to produce 48,600 units and sell 47,900 units at a price of $13.00 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 $28,000, and total administrative expense is projected at $129,500.

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 Less operating expenses: 2. What if the cost of goods sold percentage for the past few years was 66.19 percent? Management's reaction might be: -Select your answer Further analyze sales reports Grant bonuses to production personnel Trim administrative staff Investigate production cost management