Question
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
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 | $60,000 |
Variable overhead | 25,000 |
Fixed overhead | 220,000 |
Next year, Pietro expects to purchase $119,300 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 | $5,600 | $12,500 | |
Ending | 4,900 | 14,600 |
Next year, Pietro expects to produce 50,000 units and sell 49,300 units at a price of $12.50 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 $26,000, and total administrative expense is projected at $134,000.
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.
Note: due to rounding, percentages may not add down.
Percent | |||
Administrative expensesCost of goods soldGross marginSalesSelling expenses | $- Select - | - Select -% | |
Administrative expensesCost of goods soldGross marginOperating incomeSelling expenses | - Select - | - Select -% | |
Administrative expensesCost of goods soldGross marginOperating incomeSelling expenses | $- Select - | - Select -% | |
Less operating expenses: | |||
Cost of goods soldGross marginOperating incomeSalesSelling expenses | $- Select - | ||
Administrative expensesCost of goods soldGross marginOperating incomeSales | - Select - | - Select - | - Select -% |
Operating incomeOperating loss | $- Select - | - Select -% |
2. What if the cost of goods sold percentage for the past few years was 65 percent? Management's reaction might be:
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