For the coming year, Paulson Computers Inc. expects to produce 144,000 computers. Of these, 64,100 will be consumer (personal) computers and 79,900 will be small business computers. Common fixed overhead is $1,700,400. Additional information for the coming year is as follows:

	Consumer	Small Business
	Computers	Computers
Price	$ 642	$ 1,670
Unit direct materials	490	1,176
Unit direct labor	90	308
Unit variable overhead	23	49
Unit variable selling expense	35	66
Total direct fixed overhead	120,000	349,100

Fixed selling and administrative expense for Paulson Computers is $2,959,600 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.

1(a) Calculate the unit variable cost under variable costing.

	Consumer computers: unit variable cost
	Small business computers: unit variable cost

1(b) Is this cost the same as unit variable product cost? Why or why not?

the unit variable cost equal the unit variable product cost.

The difference between the two costs is that also includes .

2. Prepare a segmented variable-costing income statement for next year. The segments correspond to product lines: consumer computers and small business computers. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement. If an amount is negative, first enter a minus sign (-).

Paulson Computers Inc.

Segmented Variable-Costing Income Statement

For the Coming Year

1		Consumer Computers	Small Business Computers	Total
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