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E8-30: p. 373

Exercise 8-30 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.

Exercise 8-30 Name: Enter the appropriate amounts or formulas in the shaded cells. An asterisk (*) will appear in the column to the right of an incorrect amount. Essay answers will not be graded. Consumer Computers 1. Small Business Computers Unit direct materials cost Unit direct labor cost Unit variable overhead cost Unit fixed overhead cost Total unit variable cost 2. Paulson Computers Inc. Segmented Income Statement For the Coming Year Consumer Computers Sales Less variable expenses: Variable cost of goods sold Variable selling expense Contribution margin Less direct fixed expenses: Direct fixed overhead Segment margin Less common fixed expenses: Common fixed overhead Common selling and administrative Operating income Small Business Computers $