For the coming year, Archway C

For the coming year, Archway Computers Inc. expects to produceand sell 200,000 computers. Of these, 80,000 will be consumer(personal) computers and 120,000 will be small business computers.Common fixed overhead is $700,000. Additional information for thecoming year is as follows:

ConsumerComputers      Small BusinessComputers

Price                                                               $780                                       $2,300

Unit DirectMaterials                                    500                                         1,800

Unit DirectLabour                                        160                                            290

Unit VariableOverhead                                40                                              75

Unit Variable SellingExpenses                   75                                              70

Total Direct FixedOverhead               120,000                                    200,000


Fixed selling and administrative expense for Archway ComputersInc. is $3,460,000 per year.


Calculate the unit variable cost under variable costing. Is thiscost the same as unit variable product cost? Why or why not?

Prepare a segmented variable-costing income statement for nextyear. The segments correspond to product lines: consumer computersand small business computers.



Archway Computers

  1. Computation of unit variable cost under variable costingmethod:

Consumer Computers

Small Business Computers

Unit variable cost:

Direct material



Direct labot



variable overhead



Variable selling expenses



total unit variable cost



Unit Variable Product Cost

Consumer Computers

Small Business Computers

Unit variable product cost:

Direct material



Direct labot



variable overhead



Total unit variable product cost



Unit variable cost and unit variable product cost are different.The difference is due to the inclusion of variable selling expensesin the unit variable cost. The unit variable product cost comprisesthose costs that are incurred in the production such as directmaterial cost, direct labor cost and variable overhead. Sellingexpenses are not part of production cost.

Segmented Variable Costing Income Statement

Consumer Computers

Small Business Computers


Sales (units)




Sales (Dollars)




Variable costs




Contribution margin




Direct fixed overhead




Segment Margin




Common Fixed Costs


Operating Income



  • Consumer Computers = 80,000 x $780 = $62,400,000
  • Business Computers = 120,000 x 2,300 = $276,000,000

Variable cost

  • Consumer Computers = 80,000 x $775 = $62,000,000
  • Business Computers = 120,000 x 2,235 = $268,200,000

Contribution margin = sales – variable cost

Segment margin = contribution margin – direct fixed overhead

Operating income = total segment margin – common fixed costs

"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.