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Basic Cost Management Concepts: Chapter TwoCornerstone Exercise 2.1Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total cost:ITEMS$Direct Materials120,000Direct Labor60,000Variable Overhead25,000Fixed Overhead220,0001) Calculate the prime cost per unit:2) Calculate the conversion cost per unit:3) Calculate total Variable Cost per unit:4) Calculate the total product (manufacturing) cost per unit:
Cornerstone Exercise 2.21)Pietro Frozen Foods Inc.Statement of Cost of Goods ManufacturedFor the Coming Year$$Direct MaterialsBeginning Inventory5,600Add: Purchases119,300Materials Available124,900Less: Ending Inventory4,900Direct Materials used in Production120,000Direct Labor60,000Manufacturing Factory Overhead ( $25,000 + $220,000)245,000Total Manufacturing Costs Added425,000Add: Beginning Work in Process12,500Less: Ending Work in Process14,600Cost of Goods Manufactured 422,9002)Cornerstone Exercise 2.3ITEMSDIRECTION OF CHANGEAMOUNT$Direct Materials usedDecrease 2,000Total Manufacturing GoodsDecrease 2,000Cost of Goods ManufacturedDecrease 2,000
1) 2) If beginning Inventory of finished goods decreased by $5000, the cost of goods sold woulddecrease by the same amount.