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Cost of Goods Manufactured Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that...

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Accounting

Cost of Goods Manufactured

Pietro Frozen Foods, Inc., produces frozen pizzas. For nextyear, Pietro predicts that 50,000 units will be produced, with thefollowing total costs:

Direct materials?
Direct labor$61,000
Variable overhead30,000
Fixed overhead205,000

Next year, Pietro expects to purchase $115,000 of directmaterials. Projected beginning and ending inventories for directmaterials and work in process are as follows:

Direct materials
Inventory		Work-in-Process
Inventory
Beginning$6,000$10,500
Ending$5,900$12,500

Required:

1. Prepare a statement of cost of goodsmanufactured.

Pietro Frozen Foods, Inc.
Statement of Cost of Goods Manufactured
For the Coming Year
Direct materials
Beginning inventory$
Materials available$
Direct materials used in production$
Total manufacturing costs added$
Cost of goods manufactured$

2. What if the endinginventory of direct materials increased by $2,600? Indicate theaffect that this would have on the items listed below:

Direction of changeAmount
Direct materials usedby$
Total manufacturing costsby$
Cost of goods manufacturedby$

Answer & Explanation Solved by verified expert
4.4 Ratings (702 Votes)

Statement of cost of goods manufactured

Direct materials

       115,000

Beginning inventory

            6,000

Materials available

       121,000

Less: ending inventory

          (5,900)

Direct materials used for production

       236,100

Direct labour

          61,000

Overheads (Variable and fixed)

       235,000

Total manufacturing costs added

       532,100

Add: Beginning WIP

          10,500

Less: ending WIP

        (12,500)

Cost of goods manufactured

       530,100

Effect of increase in ending inventory by $2,600

Direct materials used

Decrease

by

$2,600

Total manufacturing costs

Decrease

by

$2,600

Cost of goods manufactured

Decrease

by

$2,600

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