In October 2021, the technology analysis intellectual property services firm TechInsights did a teardown and cost analysis of Apple’s iPhone 13 Pro phone model that was released in fall 2021.5 TechInsights estimated the cost of the components in the iPhone 13 Pro (256 GB model) to be \($570.00\). Components in an iPhone include the screen display, cameras, RF chipset, memory, and other parts. The selling price of this model is approximately

\($1,099\) per Apple’s website.

Questions:-

1. Do you think that Apple uses a process costing system or a job costing system? Give reasons for your answer.
2. Other than the components in an iPhone, what other items would be included in the manufacturing cost of an iPhone in Apple’s inventory?
3. Assume that Apple calculates its manufacturing cost for each iPhone to be \($650\) (including the costs of components.) What would be the estimated gross profit per phone? What types of costs other than manufacturing costs would gross profit have to cover?
4. The manufacturing costs for iPhones sold would appear on Apple’s income statement. In which income statement component would these manufacturing costs appear?
5. Apple could start manufacturing some products in the United States rather than in China. If some iPhones were to be manufactured in the United States, which cost components would you expect to increase? Which cost components might you expect to decrease? What other factors would Apple consider when deciding where to manufacture its products?