Question

Segmented Income Statements, Inventory Valuation For the coming year, Archway Computers Inc. expects to produce and sell 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: 90 Consumer Computer Small Business Computer Price $640 $1,675 Unit direct materials 442 988 Unit direct labour 310 Unit variable overhead Unit variable selling expense Total direct fixed overhead 120,000 350,000 Fixed selling and administrative expense for Archway Computers is $2,960,000 per year. 23 50 Required: 1. Conceptual Connection: Calculate the unit variable cost under variable costing. Total Unit Variable Cost Consumer computers Small business computers Is this cost the same as unit variable product cost? 2. Prepare a segmented variable-costing income statement for next year. The segments correspond to product lines: consumer computers and small business computers. If a value needs to be deducted, remember to include a negative (-) sign. Archway Computers Inc. Segmented Income Statement For the Coming Year Consumer Computers Small Business Computers Total Less variable expenses: Less direct fixed expenses: mm in n) in 0 Less common fixed expenses:

Answer 1

Sol (1) Statement showing Corderboerion of Vicariedade Cost Percu't Consumer Small Business I Computer's Computer's Une's Direct Malerial Cost $ 442 $ 988 Unit Direct labour Cost $ 90 $ 310 Unit Variable Overhead $ 23 $ 50 Uuit Variable selling expense | $ 35 $ 65 Totall vuit Vernicibele cost. I $590 $1,413 Total Unit Variable Cost Consumer Computers $590 Small Business Computers $1413 No this cost is not the same as unit Variable proeleet Cost because Product Col in celudes only Cost of direct Material, direct labour, dired expenses. and manufackuning Overhead

0) Sol. (2) Archway Computer luce Sagmented Income statement for the Coming year Consumer Smeill Business 1. Total | Computers | Computers Sales $410,960,000 $ 134,000,000 15174,960,000 Tess Variable Expenses: 12 Direct Materials |$(28,288,000) $ (79,040,000) $(107,328,000) Direct labour $ (5,160,000) $ (24,800,000) $(39560,000) Variable Overhead $(1,472,000) $ (4,000,000) $ (5.472.000) Varicable Selling expresse $(2240,000) $ (5,200,000) $ (7,440,000) Contribution Margin $ 3,200,000 $20,960,000 $24 160,000 Less: Direct fixed expenses $(120,000) $ ( 350,000) $ (470,000) Segment Margin $ 3080,000 $20,610,000 $23,690,000 Less - Common fixed expenses: Common fired, Overhead 2 $(1.700,000) Common Selling and Admin. Experise $(2960,000) Net ofperating Income $19,030,000 mmor

Working Note: Sales & Consumer Computers - 2 Number of uit Sold & Selling 64000: builos X $ 640 = $ 40,960,000 Small Business Computers as 80,000 units X $ 1,6752 E $134,000,000 Price percuit D Direct Maleniculis :- Cost Consumer Computers & Pet = Number of unit produced Unit 64,800 vull's $442° 0 = $ 28,288,000 Small Business Computers & = 80,000 vuit's X $988. $ 79,040,000 Direct Tabour & Consumer Computers & - = Number of unit produced & Unit Cust 64,000 uut. $90 $5,160,000 Small Business Computer's : = 80,000 unile's X $ 310 = $ 24,800,000

Variable Overhead - Consumer Combouteis : = Number of unit Isoducedy Unit Cost = 64000 units & $23 = $1,472,000 ft Small Business Computers & 80000 Huiles X $50 = $ 4,000,000 Variable Selling Ex feules => Consumer Computed a co = Naumber of wil Gold X Unik | - 64 bop vui ( x 35 $ 2240,000 Cast . Small Business Computers & Number of wit Sold & unit Cool 1 80000 U.U X $ 650 = $5,200,000