Restoring manufacturing jobs to the United States’ struggling Rust Belt communities was one of President-elect Donald Trump’s biggest campaign promises — and Apple is stepping up to the plate. The consumer electronics giant is exploring the possibility of moving smartphone production to the United States.

Electronics maker Foxconn, one of Apple’s largest suppliers, confirmed on Sunday that it was mulling a $7 billion investment to create a flat-panel manufacturing facility in the United States, Reuters reported. This would bring one of the major components in smartphones to American shores and would be an important step toward building iPhones in the U.S. Founder and chairman Terry Gou said the move may create as many as 50,000 jobs and would involve Japanese subsidiary Sharp; talks were reportedly underway in Pennsylvania and in other states. Rumors swirl about “Made in the USA” Speculation on Apple’s plans began in late 2016, and heightened following an interview with Donald Trump in The New York Times, during which he recounted a phone conversation with Tim Cook urging the CEO to move part of Apple’s production line to the U.S.: “I was honored yesterday, I got a call from Bill Gates, great call, we had a great conversation, I got a call from Tim Cook at Apple, and I said, ‘Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States, where instead of going to China, and going to Vietnam, and going to the places that you go to, you’re making your product right here.’ He said, ‘I understand that.’ I said: ‘I think we’ll create the incentives for you, and I think you’re going to do it. We’re going for a very large tax cut for corporations, which you’ll be happy about.’”

Trump has spoken on a number of occasions since about Apple moving production to the U.S. Days before his inauguration, the president-elect spoke with Axios, saying that Cook had his “eyes open to it” and that he thinks Cook “loves this country, and I think he’d like to do something major here.” Such a move may become more feasible given Foxconn’s plans. The company first confirmed that it was exploring investing in the U.S. in early December: “We are in preliminary discussions regarding a potential investment that would represent an expansion of our current U.S. operations,” Foxconn said to CNNMoney. Softbank CEO Masayoshi Son met with Trump shortly after to announce a planned $50 billion investment in U.S. startups. The CEO held a paper with Softbank’s and Foxconn’s name, along with the following text: “commit to: Invest $50bn + $7bn in US, generate 50k + 50k new jobs in US in next 4 years.” That led to speculation that Foxconn would have a role in bringing jobs to the U.S.

“While the scope of the potential investment has not been determined, we will announce the details of any plans following the completion of direct discussions between our leadership and the relevant U.S. officials,” the manufacturer told CNNMoney.

Trump is a vocal supporter of U.S. companies that build their products in the U.S. and has proposed levying steep tariffs — potentially as high as 45 percent — on competing Chinese importers.

Nikkei, citing a source familiar with Apple’s plans, reports that the Cupertino, California-based company has tasked Foxconn and Pegatron, the two tech firms responsible for assembling more than 200 million of Apple’s iPhones annually, with investigating the feasibility of building plants in the U.S. “We’re going to get Apple to build their computers and things in this country instead of other countries,” Trump said in a speech in January. “How does it help us when they make it in China?” Pegatron reportedly demurred, citing logistical concerns. Foxconn agreed to compile a report as soon as June, but company chairman Terry Gou warned that it would show drastically higher productions costs. The potential result? An iPhone made in the U.S. could retail for as much as $740 to $1,300 for a 32GB iPhone 7 versus $650 today, according to Nikkei.

Apple has previously declined to move iPhones production stateside, citing costs. What would a U.S.-made iPhone cost? A thorough report in the MIT Technology Review found that moving iPhone assembly to the U.S. would add $30 to $40 to the cost of an iPhone thanks to “transportation and logistics expenses [that] would arise from shipping parts.” Manufacturing the smartphone’s hundreds of components domestically is an even pricier — and vastly more complex — proposition. Apple Chief Executive Tim Cook told CBS’ 60 Minutes in December 2015 that the U.S. labor pool lacked the skills necessary to carry out iPhone production, and Apple executives have estimated that it would take as long as nine months to recruit the roughly 8,700 industrial engineers that oversee Chinese assembly lines. And that’s before efficiency is taken into account: A 2012 CNN Money report noted that Chinese factories house workers in employee dormitories and “can send hundreds of thousands to the assembly lines at a moment’s notice.” Then there’s the U.S.’s lack of natural resources to consider. MIT Technology Review points out that few of the 75 elements required to manufacture the iPhone are available commercially in the U.S. Aluminum, for instance, requires bauxite, and there are no bauxite mines in the U.S. China, on the other hand, produces 85 percent of the world’s rare earth metals. Further complicating matters is Apple’s sprawling supply chain of more than 750 firms in over 20 countries. Taiwan Semiconductor produces crucial iPhone chips; South Korea’s SK Hynix and Japan’s Toshiba produce the handset’s memory modules, and Japan’s Japan Display and Sharp provide the iPhone’s display. “To make iPhones, there will need to be a cluster of suppliers in the same place, which the U.S. does not have at the moment,” an industry executive familiar with iPhone production told economics blog NorthCrane. But Apple’s plan isn’t without precedent. In 2013, Motorola Mobility employed more than 3,800 employees to assemble the Moto X, a flagship Android phone, at a factory in Fort Worth, Texas. Just a year later, though, it was forced to shutter production as a result of “exceptionally tough” market conditions, according to Motorola president Rick Osterloh. The company subsequently moved production to China. Others have been more successful. Foxconn established a stateside iMac computer assembly line in 2012. A year later, Singapore-based Flextronics, the manufacturer of Apple’s Mac Pro desktop computer, built a production line in Austin, Texas.

In October 2015, Sharp president Tai Jeng-wu suggested that if Apple were to begin producing smartphones in the United States, it would likely follow suit. “We are now building a new [advanced organic light-emitting diode] facility in Japan. We can make [OLED panels] in the U.S. too,” he said. “If our key customer demands us to manufacture in the U.S., is it possible for us not to do so?

With reference to the case study, discuss the impact that relocating would have on the factors affecting location decisions. (Further research is required by the student into the factors that affect location decisions.) (30)

Sweet Air Filtration Products Company, a major supplier of air filters sold throughout the United States, employs one hundred workers at its principal manufacturing plant. The plant is located in Thunder Bay, which has a population that is 50 percent white and 25 percent African American, with the balance Hispanic American, Asian American, and others. Sweet Air requires a high school diploma as a condition of employment for its cleaning crew. Three-fourths of the white population completed high school, compared with only one-fourth of those in the minority groups. Sweet Air has an all-white cleaning crew.

Has Sweet Air violated the Civil Rights Act? Explain your answer.

Consider virtually any airline flying domestically in the United States. Most carriers have a weight limit of 50 lbs. per bag that is to be checked into cargo. Additionally, we will assume from available data that the weight of people in the United States is, on average, 172.2 lbs. with a standard deviation of 29.8 lbs.

1. Assuming a group of 100 passengers travel, discuss for this data the worst possible case of weight distribution (leading to a tail-heavy plane). What would the total weight difference between the two ends of the plane be? It is relatively safe to say that almost 100% of people would be within 2 standard deviations of the mean.

We now consider how the baggage is distributed throughout the cargo hold. In an ideal setting, a bag weight of 50 lbs, the maximum weight allowed, would be an "extreme" for any given flight. In other words, we would expect most people to have bag weights well below the maximum. Since, however, we are dealing with a normal distribution, we will, at the very least, assume that very few people have bags that have weights near the described maximum. That is, a bag weight of 50 lbs would likely be three standard deviations away from the mean.

2. Suppose the bag weights are found to be normally distributed with a mean weight of 25 lbs. What would the standard deviation of bag weights be? Describe, in words, what this value means. Is it realistic, given what we know about bag weights? Would the standard deviation be more or less realistic than if the mean bag weight was 20 lbs? 34 lbs?

3. In reality, what would you expect the shape of the distribution of bag weights to look like? Would it be normal? Would it be skewed in one direction or another? Would it be bimodal (having two peaks instead of just one)? Use your intuition to propose a reasonable possibility.

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Each T-shirt is expected to sell for $21.

The purchasing manager buys the T-shirts for $8 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 31 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $62,000 per quarter plus 18 percent of total sales revenue.

1. Determine budgeted sales revenue for each quarter.
Budgeted Sales Revenue  
Quarter1:

Quarter 2:

Quarter 3:

2. Determine budgeted cost of merchandise purchased for each quarter.
Budgeted Cost of Merchandise Purchased
Quarter1:

Quarter 2:

Quarter 3:

3. Determine budgeted cost of good sold for each quarter.
Budgeted Cost of Goods Sold
Quarter1:

Quarter 2:

Quarter 3:

4. Determine selling and administrative expenses for each quarter.

Budgeted Selling and Administrative Expenses

Quarter1:

Quarter 2:

Quarter 3:

Complete the budgeted income statement for each quarter.

Cincinnati Paint Company sells quality brands of paints through hardware stores throughout the United States. The company maintains a large sales force whose job it is to call on existing customers as well as look for new business. The national sales manager is investigating the relationship between the number of sales calls made and the miles driven by the sales representative. Also, do the sales representatives who drive the most miles and make the most calls necessarily earn the most in sales commissions? To investigate, the vice president of sales selected a sample of 25 sales representatives and determined:

The amount earned in commissions last month (Y).

The number of miles driven last month (X1)

The number of sales calls made last month (X2)

Click here for the Excel Data File

Develop a regression equation including an interaction term. (Round your answers to 3 decimal places. Negative amounts should be indicated by a minus sign.)

A.) Commissions =_______ +________ Calls +________ Miles +______ X1X2

B.) Complete the following table. (Round your answers to 3 decimal places. Negative amounts should be indicated by a minus sign.)

Predictor Coefficient    SE Coefficient    T P-value

Constant _______         __________    ___   _________

Calls

Miles

X1X2

C.) Compute the value of the test statistic corresponding to the interaction term. (Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Each T-shirt is expected to sell for $11.

The purchasing manager buys the T-shirts for $4 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 21 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $72,000 per quarter plus 10 percent of total sales revenue.

Required:
1. Determine budgeted sales revenue for each quarter.



2. Determine budgeted cost of merchandise purchased for each quarter.



3. Determine budgeted cost of good sold for each quarter.

4. Determine selling and administrative expenses for each quarter.



5. Complete the budgeted income statement for each quarter.

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Each T-shirt is expected to sell for $21.

The purchasing manager buys the T-shirts for $8 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 31 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $62,000 per quarter plus 18 percent of total sales revenue.

Required:
1. Determine budgeted sales revenue for each quarter

2. Determine budgeted cost of merchandise purchased for each quarter

3. Determine budgeted cost of good sold for each quarter.

4. Determine selling and administrative expenses for each quarter.

5. Complete the budgeted income statement for each quarter.

Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Expected sales activity: 20,000 units at $425.00 per unit

Desired ending inventories: 10% of sales

Assume this is the first year of operations for the Bellingham plant. During the year, the company had the following activity.

In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.

b. Prepare a budgeted responsibility income statement for the Bellingham plant for the coming year.

c. Find the direct labor variances. Indicate if they are favorable or unfavorable. (Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect.)

d. Find the direct materials variances (materials price variance and quantity variance). (Enter your answers in dollars not in pounds. Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect (i.e., zero variance.)

f. Calculate the actual plant operating profit for the year.

Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs (per unit based on expected activity of 24,000 units or 36,000 direct labor hours):

Direct materials (2 pounds at $20)   $   40.00        
Direct labor (1.5 hours at $90)      135.00        
Variable overhead (1.5 hours at $20)      30.00        
Fixed overhead (1.5 hours at $30)      45.00        
Standard cost per unit   $   250.00        
Budgeted selling and administrative costs:              
Variable   $   5      per unit
Fixed   $   1,800,000        

Expected sales activity: 20,000 units at $425.00 per unit

Desired ending inventories: 10% of sales

Assume this is the first year of operations for the Bellingham plant. During the year, the company had the following activity.

  
Units produced      23,000        
Units sold      21,500        
Unit selling price   $   420        
Direct labor hours worked      34,000        
Direct labor costs   $   3,094,000        
Direct materials purchased      50,000      pounds
Direct materials costs   $   1,000,000        
Direct materials used      50,000      pounds
Actual fixed overhead   $   1,080,000        
Actual variable overhead   $   620,000        
Actual selling and administrative costs   $   2,000,000        
  

In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.

b. Prepare a budgeted responsibility income statement for the Bellingham plant for the coming year.

d. Find the direct materials variances (materials price variance and quantity variance). (Enter your answers in dollars not in pounds. Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect (i.e., zero variance.)

f. Calculate the actual plant operating profit for the year.