Questions

Do you think that Apple uses a process costing system or a job costing system? Give reasons for your answer.

Assume that Apple assigns a cost of $10 to the iPhone Xs for manufacturing cost. What specific costs do you think would be included in that manufacturing cost?

In accounting terminology, what would the costs included in the Bill of Materials (BOM) be when discussing product cost?

Assume that Apple assigns a cost of $10 for manufacturing cost. What would be the estimated gross profit per phone? What types of costs other than the costs estimated in this activity would gross profit have to go toward covering?

The BOM costs for the units sold would appear on Apples income statement. In which income statement component would these BOM costs appear?

Apple could start manufacturing some products in the United States rather than in China. If the iPhone Xs 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?

Apple iPhone Xs Max (A1921) \begin{tabular}{|l|lr|} \hline Retail Cost (as of September 28, 2018) & $1,099.00 \\ \hline Total Estimated Cost (see BOM below) & $ & 390.00 \\ \hline \end{tabular} Preliminary Bill of Materials (BOM) Estimates \begin{tabular}{|l|rr|} \hline Display \& Touch & $ & 120.00 \\ \hline Cameras & $ & 37.60 \\ \hline Mechanical/Electro-Mechanical Elements & $ & 71.50 \\ \hline Apple Processor & $ & 30.00 \\ \hline RF Chipset & $ & 17.00 \\ \hline Power Management ICs & $ & 12.55 \\ \hline Bluetooth/WLAN & $ & 7.00 \\ \hline Memory & $ & 40.75 \\ \hline RF/PA & $ & 15.50 \\ \hline User Interface & $ & 9.70 \\ \hline TrueDepth Sensing Suite & $ & 13.50 \\ \hline Sensors & $ & 1.15 \\ \hline Battery Pack(s) & $ & 6.50 \\ \hline Box Contents & $ & 7.25 \\ \hline Total Estimated Cost & $ & 390.00 \\ \hline \hline \end{tabular}