Chapter 2, Problem 4CE

Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and sell 49,300 units at a price of $12.50 each. Beginning inventory of finished goods is $42,500, and ending inventory of finished goods is expected to be $34,000. Total selling expense is projected at $26,000, and total administrative expense is projected at $134,000.

Required:

1. 1. Prepare an income statement in good form. Be sure to include the percent of sales column.
2. 2. What if the cost of goods sold percentage for the past few years was 65 percent? Explain how management might react.