Income Statement
Pietro Frozen Foods, Inc., produces frozen pizzas. For nextyear, Pietro predicts that 53,100 units will be produced, with thefollowing total costs:
| Direct materials | ? |
| Direct labor | 55,000 |
| Variable overhead | 28,000 |
| Fixed overhead | 245,000 |
Next year, Pietro expects to purchase $119,500 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 | $12,500 |
| Ending | $5,900 | $14,500 |
Next year, Pietro expects to produce 53,100 units and sell52,400 units at a price of $15.00 each. Beginning inventory offinished goods is $39,500, and ending inventory of finished goodsis expected to be $31,000. Total selling expense is projected at$27,500, and total administrative expense is projected at$126,000.
Required:
1. Prepare an income statement in good form.Round the percent to four decimal places before converting to apercentage. For example, .88349 would be rounded to .8835 andentered as 88.35.
| Pietro Frozen Foods, Inc. |
| Income Statement |
| For the Coming Year |
| | | Percent |
- Administrative expenses
- Cost of goods sold
- Gross margin
- Sales
- Selling expenses
| | $ | % |
- Administrative expenses
- Cost of goods sold
- Gross margin
- Operating income
- Selling expenses
| | | % |
- Administrative expenses
- Cost of goods sold
- Gross margin
- Operating income
- Selling expenses
| | $ | % |
| Less operating expenses: | | | |
- Cost of goods sold
- Gross margin
- Operating income
- Sales
- Selling expenses
| $ | | |
- Administrative expenses
- Cost of goods sold
- Gross margin
- Operating income
- Sales
| | | % |
- Operating income
- Operating loss
| | $ | % |
2. What if the cost of goods soldpercentage for the past few years was 54.77 percent? Management'sreaction might be:
