Problem - Segmented Income Statements, Inventory Valuation
For the coming year, Paulson Computers Inc. expects to produce 144,000 computers. Of these, 64,000 will be consumer (personal) computers and 80,000 will be small business computers. Common fixed overhead is $1,700,000. Additional information for the coming year is as follows:
|
Consumer Computers
|
Small Business Computers
|
|
Price
|
$ 640
|
$ 1,675
|
|
Unit direct materials
|
490
|
1,180
|
|
Unit direct labor
|
90
|
310
|
|
Unit variable overhead
|
23
|
50
|
|
Unit variable selling expense
|
35
|
65
|
|
Total direct fixed overhead
|
120,000
|
350,000
|
Fixed selling and administrative expense for Paulson Computers is $2,960,000 per year.
Required:
1. CONCEPTUAL CONNECTION Calculate the unit variable cost under variable costing. Is this cost the same as unit variable product cost? Why or why not?
2. Prepare a segmented variable-costing income statement for next year. The segments correspond to product lines: consumer computers and small business computers.