Question

Describe the types of costs involved in the production of the Apple iphone?

Answer 1

There occur various costs in the production of Apple iphone based on the prices of its components, transportation of raw materials, wages of workers etc. There are three types of costs that occur in the production of Apple iphones. These are as follows-

1) Bill of components:- It is the type of costs that occur during the procurement of raw materials, components and assemblies which are used to manufacture the end product. The amalgamation of various components make the final device. So all the suppliers of raw materials and components of Iphone are paid in this category.

2) Transportation costs:- Most of the components and raw materials of iphones are outsourced in order to operate at a low cost effective level. Countries specialising in production of raw materials and equipments at lower rates are the amin suppliers for iphones. So importing all the components from different parts of the world incur different transportation costs.

3) Manufacturing costs:- Manufacturing costs include the costs of labours, direct material costs and indirect costs. All the costs incurred for the workers engaged in different units of manufacturing iphones directly and marketing fall in this category. The cost of raw materials which become the part of finished products are direct material costs. For eg, glass for display on the iphone is a direct raw material. Generally indirect costs occur after the process of manufacturing which are costs like marketing, selling, general and administrative expenses, costs of stores to sell the products etc are indirect costs.