Question

Cost of Goods SoldPietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 49,100 units will be produced, with the following total costs:Direct materials ?Direct labor 53,000Variable overhead 25,000Fixed overhead 185,000Next year, Pietro expects to purchase $128,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows:Direct materialsInventory Work-in-ProcessInventoryBeginning $6,000 $14,000Ending $5,900 $16,000Pietro expects to produce 49,100 units and sell 48,400 units. Beginning inventory of finished goods is $47,500, and ending inventory of finished goods is expected to be $39,000.Required:1. Prepare a statement of cost of goods sold in good form.
2. What if the beginning inventory of finished goods decreased by $3,750? What would be the effect on the cost of goods sold?

Answer 1

Answer:

Statement of Cost of Goods sold

Cost of Goods Sold

Beginning Finished Goods Inventory      $47,500

Cost of Goods Manufactured                   $389,100

Less: Ending Finished Goods Inventory  -$39,000

Cost of Goods sold                                    $397,600

Cost of Goods Manufactured

Direct Materials Used:                            $128,000

 Direct Material inventory,  Beginning     $6,000

 Less: Raw Materials inventory Ending  -$5,900  

Direct Materials used                                                                        $128,100

Direct labor                                                                                           $53,000

Variable overhead:                                  $25,000

 Fixed overhead                                    $185,000

   Total manufacturing overhead                                                        $210,000

Total Manufacturing Cost                                                                     $391,100

 Add: Work in process inventory Beginning                                     $14,000

 Less: Work in process inventory  Ending                                         -$16,000

Cost of goods manufactured                                                              389,100

2. What if the beginning inventory of finished goods decreased by $3,750? What would be the effect on the cost of goods sold?

Cost of Goods Sold

Beginning Finished Goods Inventory                 ($47,500-$3,750)    $43,750

Cost of Goods Manufactured                                                              $389,100

Less: Ending Finished Goods Inventory                                             -$39,000

Cost of Goods sold                                                                              $393,850