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# Income Statement Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 54,500...

Income Statement Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 54,500 units will be produced, with the following total costs: Direct materials 2 Direct labor 74,000 Variable overhead 26,000 Fixed overhead 240,000 Next year, Pietro expects to purchase \$122,000 of direct materials Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Work-in-Process Inventory Inventory Beginning \$6,000 \$14,800 Ending \$5.900 \$16,800 Next year, Pietro expects to produce 54,500 units and sell 53,800 units at a price of \$18.00 each. Beginning inventory of finished goods is \$41,500, and ending inventory of finished goods is expected to be \$33,000. Total selling expense is projected at \$25,000, and total administrative expense is projected at \$127,500 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.5835 and entere as 88.35
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 38.35 Pletro Frozen Foods, Inc. Income Statement For the Coming Year Percent Sales 968.000 100 Cost of goods sold Gross margin Less operating expenses Selling expenses Administrative expenses Operating income 2. What if the cost of goods sold percentage for the past few years was 46.39 percent? Management's reaction might be

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ReportAnswer #1
 Pietro Frozen Foods Income Statement Percent Sales (53800*18) 968400 100% Cost of Goods Sold 468600 48% Gross Margin 499800 52% Less: Operating Exp. Sellin g Exp. 25000 Admin Exp. 127500 152500 16% Operating income 347300 36%

Working Notes:

1.

 Computation of Cost of Goods Manufactured Particulars Amount Direct Material Used: Beginning Raw Material 6000 Add: Raw Material Purchase 122000 Total Raw Material Available 128000 Less: Ending Raw Material -5900 Total Raw Material Used 122100 Direct Labor 74000 Manuf. OH: Variable OH 26000 Fixed OH 240000 Total Manuf. OH 266000 Total Manuf. Cost 462100 Add. Opening WIP 14800 476900 Less: Closing WIP -16800 Cost of of goods Manufactured 460100

2.

 Pietro Frozen Foods Cost of goods sold Beginning finished goods inventory 41500 Add: Cost of goods manufactured 460100 Cost of goods available for sales 501600 Less: ending finished goods inventory -33000 Cost of goods sold 468600
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