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 ?xed overhead is $1,700,000. Additional information for the coming year is as follows:

Consumer Computer Small Business Computer

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 ?xed 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 corre-

spond to product lines: consumer computers and small business computers.