Question

1. The product is an Apple iPad Air. The price on Apple's website is $599.00

Based on the information given above, along with the description of the company's business, identify the potential costs that are required to provide the product selected in part (1) and categorize them as fixed or variable.

(The information listed above is the only material provided for the question)

Answer 1

The potential costs that are required to provide Apple Ipad Air and its classification is given below

Variable costs

· Material cost – Cost of Plastics, Glass, Circuit boards, Battery, Display, aluminium,

· Packaging cost – Corrugated, Polystyrene,

· Labor cost – Labor directly engaged in manufacture and production, labor engaged in assembling and packaging of product

· Factory indirect material and indirect labor

· Factory supplies like consumables, lubricants

· Sales incentives- Variable sales incentives offered to customers

Fixed costs:

· Depreciation on factory assets – Plant , equipment

· Rent paid on buildings

· Repairs and maintenance

· Supervisor salaries deployed at manufacturing sites

· Annual insurance , rates and taxes paid on plant and buildings

· Advertising expenses

· Salaries of management team