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.

Use the following information for Exercises 8-31 and 8-32:

Ranger Company purchases 17,280 units of Product Beta each year in lots of 864 units per order. The cost of placing one order is $10, and the cost of carrying one unit of product in inventory for a year is $6.