The document outlines the various cost categories for Apple Inc., including direct material, labor, factory overhead, and R&D expenses, with specific emphasis on the costs associated with producing iPhones. It also discusses the importance of financial statements for various stakeholders, such as investors, employees, and suppliers, as they assess the organization's financial health. The conclusion highlights the multifaceted nature of financial statements as tools for communicating strategic information and influencing company reputation.

1. PORTFOLIO ASSIGNMENT UNIT 2
2
Portfolio Assignment Unit 2
Apple Inc. has disclosed the cost under the category of cost of
revenue, research and development cost, sales, general and
Admin cost, interest expenses and tax expenses. So the
following are the cost that may come from these cost categories
(Terrel, E., 2008).
· Cost of Revenue:
It includes the cost incurred to get the sales revenue plus the
cost of goods sold.
1. Direct Material Cost
It includes the cost of components such as batteries, cameras,
chips and others to produce the iPhone. It is the variable cost
that vary with the number of iPhone produced. Apple Inc.
purchased these item from all around the globe. Cost driver of
direct material cost is number iPhone produced during a
particular period.
2. Direct Labor Cost
It is cost that incurred in the shape of wages to produce the
goods such as iPhone. Apple Inc. has outsourced its entire
manufacturing process and rely on the developing countries
such as China, Taiwan and other Asian countries to get the
benefit of cheap labor. Apple Inc. paid these direct labor cost
to its manufacturing suppliers such as Foxconn which is Taiwan
company to assemble its iPhones and other products. Cost driver
is number of direct labor hours (Cuenca, S., 2016).

2. 3. Factory Overhead Cost (FOH)
Electricity cost, depreciation of plant and equipment, rent of
factory and building and many others come under this category.
Manufacturing overhead is the mixed cost for Apple Inc.
because it has the characteristics of both fixed and variable
cost.
· Research and Development
Apple Inc. continuously spending its huge budget on the
research and development in each year. Last year Apple Inc.
spends $11.581 Billion on the research and development.
Following are the possible Research and development
expenditure of Apple Inc (Levy, S., 2018).
4. Market Research
It is the part of Research and development under this head
Apple Inc. forecast the upcoming future technologies and
collects the market data where its future products can be sold.
5. Software development cost
Apple Inc. has its own software known as IOS which is used in
the iPhone. Apple Inc. continuously updating its software and
makes the best possible changes in each year.
6. Warranty cost
It is cost that the Apple Inc. incurred in each year to repair and
replace its products that has been sold to its customer and
become faulty under warrant years. It is fixed cost and adjusted
at the end of period
7. Licensing Cost
Though this cost Apple Inc. buys the license for the
technologies that will be used in the upcoming products of
Apple Inc. and also pays royalty for using the technologies in
its products. It is also the fixed cost
· Sales, General and Admin Expenses:
Apple Inc. has spent the $ 15.261 billion in 2018. Following
expenses comes under this head
8. Selling Expenses
Amount of commission paid by the Apple Inc. to its suppliers

3. for selling its products to the final customers. Advertising
expenses also comes under this head. It is variable cost and
changing with the number of products sold
9. Salaries Expenses
Cost paid the Apple Inc. to its employees on the basis of
monthly salaries for providing the services to Apple Inc. is
come under this head. It is fixed cost for Apple Inc.
10. Investment Cost
Apple Inc. pays the investment cost in the shape of interest
expenses in each year for getting the resources from its supplier
(Levy, S., 2018).
Manufacturing Overhead at Apple Inc.
All the cost other than direct material and direct labour incurred
in the manufacturing process of iPhone is considered as FOH.
Supervisor salaries, electricity cost, depreciation of plant and
equipment, rent of factory and building, cost of supplies used
and many others come under this category. Manufacturing
overhead is the mixed cost for Apple Inc. because it has the
characteristics of both fixed and variable cost. Apple Inc. paid
these cost to its manufacturing partners in the shape of service
charges. Number of Machine hours is the cost driver for the
Manufacturing overhead. Another important factor is that Apple
Inc. has longer the product life cycle of its key products which
also facilitate the Apple Inc. to get its finished goods on lower
prices from key suppliers for reducing the per unit cost of
products.
Manufacturing Overhead
Activities
Cost Driver
Employees who supervise the overall work
Number of Inspections
Total amount of Supplies used in the Manufacturing process
Number of Finished item produced in a particular period
Labor that assemble the Apple Inc. products

4. Wages
Electricity used by the plants and factory for the production
process
Number of machine hours
Decreasing the value of plants and equipment due to normal
wear and tear
Number of machine hours
References
· Terrel, E. (2008, April 22). Apple Computer, Inc. Retrieved
November 22, 2019, from
https://www.loc.gov/rr/business/businesshistory/April/apple.htm
l.
· Levy, S. (2018, August 22). Apple Inc. Retrieved November
22, 2019, from https://www.britannica.com/topic/Apple-Inc.
· Cuenca, S. (2016, April 16). SUPPLY CHAIN
MANAGEMENT AT APPLE INC. Retrieved November 23,
2019, from https://www.youtube.com/watch?v=w1_ZWtxPABY.
PORTFOLIO ACTIVITY UNIT 1
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Portfolio Activity Unit 1

5. To begin with, financial statements should give a
complete picture of the financial condition of the organization
for a specific period. Users of financial statements include
current and potential investors, employees, creditors, suppliers
and other commercial counterparties, customers, government
agencies, the public and other interested users. They use
financial statements to meet various information needs,
including:
· investors (capital providers and their advisers) are interested
in information that will help determine whether to buy, hold or
sell shares, what are the risks associated with the investment,
and the return on the investment (Tad.L, 2002). Shareholders
are interested in information that will allow them to assess the
ability of the organization to pay dividends;
· employees and their representatives are interested in
information about the stability and profitability of employers,
the ability of the organization to provide them with wages,
social benefits and opportunities for further work;
· lenders are interested in information that can determine
whether loans and interest due will be paid on time;
· suppliers and other commercial counterparties are interested in
information that enables them to determine whether the amount
owed to them will be paid on time;
· clients are interested in information about the continuity of the
organization, especially when they have long-term agreements
or are dependent on the organization;
· governments and government agencies are interested in the
information needed to regulate organizations, determine tax
policies, and calculate national income and other similar
statistics;
· the public is interested in information about the directions of

6. development and achievements of the organization, its areas of
activity (White, I., Sondhi, C., Fried, D., 2002).
Management is also interested in the information contained in
the financial statements. However, the management of the
organization has access to additional management and financial
information that helps planning, decision-making and control.
The form and content of such additional information shall be
determined by the management of the organization (Walther, L.
M. & Skousen, C.J., 2009).
As for my personal experience, for the head of the
trading network "Sulpak", in which I previously worked, the
cash flow statement is not of great interest. Typically, cash
management occurs in accordance with the requirements of the
CFO and in the presence of serious problems with the turnover
of capital and significant deviations. At Sulpak, one of the most
requested reports was the report on margin and gross profit by
product lines. It was formed weekly and was valuable because it
allowed to see the dynamics of gross profit and margin of each
product line of the enterprise in comparison with the budget and
last year. I believe that for a trading company, managing
margin/gross profit through such a report is a task of paramount
importance, since the level of marginality has a significant
impact on the amount of operating leverage and, as a
consequence, on the profitability of the company's net profit.
The report, which I would also add to the list of mandatory, is a
report on sales in natural terms (pieces/packages/tons/cubic
meters, etc.). This report gives the head of the trading company
a clear picture of the dynamics of sales and allows to compare
different periods, excluding the impact of pricing policy. In my
opinion, the analysis of sales only in monetary terms is not
enough.
In conclusion, we can conclude that the financial
statement is a multifaceted tool for interacting with users,
which allows both to convey strategic information to the
financial community first hand and to influence the image and
reputation of the company as a whole (Heisinger, K., & Hoyle,

7. J. B., 2012).
References
· Heisinger, K., & Hoyle, J. B.(2012). Accounting for
Managers. Creative Commons by-nc-sa 3.0. Can be read online
at: https://2012books.lardbucket.org/books/accounting-for-
managers/
· Walther, L. M. & Skousen, C.J. (2009). Managerial and Cost
Accounting. Bookboon.com
· White, I., Sondhi, C., Fried, D. (2002). The Analysis and Use
of Financial Statements 3rd Ed. New York: John Wiley & Sons,
Inc.
· Leaky, Tad. (2002, January). See through financials. Business
finance, 15-16.