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	$54,000
Variable overhead	15,000
Fixed overhead	245,000

Next year, Pietro expects to purchase $124,500 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	$5,000	$10,600
Ending	$4,900	$12,600

Required:

1. Prepare a statement of cost of goods manufactured.

Pietro Frozen Foods, Inc.
Statement of Cost of Goods Manufactured
For the Coming Year
Direct materials
Beginning inventory	$
Add: Purchases
Materials available	$
Less: Ending inventory
Direct materials used in production		$
Direct labor
Manufacturing (Factory) overhead
Total manufacturing costs added		$
Add: Beginning work in process
Less: Ending work in process
Cost of goods manufactured		$

2. What if the ending inventory of direct materials increased by $2,300? Indicate the affect that this would have on the items listed below:

	Direction of change			Amount
Direct materials used		by		$
Total manufacturing costs		by		$
Cost of goods manufactured		by		$