{"id":128,"date":"2016-12-05T20:00:32","date_gmt":"2016-12-05T20:00:32","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/?post_type=chapter&#038;p=128"},"modified":"2016-12-05T20:00:32","modified_gmt":"2016-12-05T20:00:32","slug":"accounting-in-the-headlines-3","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/chapter\/accounting-in-the-headlines-3\/","title":{"raw":"Accounting in the Headlines","rendered":"Accounting in the Headlines"},"content":{"raw":"<h1 class=\"title\">What is the gross margin on the Apple iPhone 5S and\u00a05C?<\/h1>\n<div class=\"entry\">\n\n<a href=\"http:\/\/wtietz.files.wordpress.com\/2013\/10\/iphone5.jpg\"><img class=\"alignright size-medium wp-image-186\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/1263\/2016\/12\/05195838\/iphone5.jpg\" alt=\"iphone5\" width=\"300\" height=\"275\"\/><\/a>According to the <a href=\"http:\/\/www.gottabemobile.com\/2013\/09\/10\/iphone-5s-iphone-5c-off-contract-price\/\" target=\"_blank\">GottaBe Mobile website<\/a> in September 2013, the Apple iPhone 5S with 16 GB memory sells off-contract for $649, while the iPhone 5C with 16 GB memory sells off-contract for $549. \u00a0The same phones with 32 GB memory sell off-contract for $749 and $649.\n\nAccording to<a href=\"http:\/\/www.businessweek.com\/articles\/2013-09-26\/apples-memory-price-markup-for-iphones-ipads-swells-its-profit\" target=\"_blank\"> Bloomberg Businessweek and IHS iSuppli,<\/a> the iPhone 5S model with 16 GB memory costs $199 to produce. \u00a0IHS iSuppli also reports that the 5C model of the iPhone (also with 16 GB of memory) costs $166 to produce. \u00a0An extra 16 GB of memory for each phone (to bring it to a total of 32 GB memory) costs Apple about <a href=\"http:\/\/www.businessweek.com\/articles\/2013-09-26\/apples-memory-price-markup-for-iphones-ipads-swells-its-profit\" target=\"_blank\">$0.71 per GB<\/a>.\n\n<strong>Questions<\/strong>\n\n1. Calculate the gross margin (or profit)\u00a0in dollars for each of the following phone models\/configurations:\n<ul><li>a. iPhone 5S with 16 GB memory<\/li>\n\t<li>b. iPhone 5S with 32 GB memory<\/li>\n\t<li>c. iPhone 5C with 16 GB memory<\/li>\n\t<li>d. iPhone 5C with 32 GB memory<\/li>\n<\/ul>\n2. Calculate the gross margin in percentage (gross margin in dollars \/ sales) for each of the following phone models\/configurations:\n<ul><li>a. iPhone 5S with 16 GB memory<\/li>\n\t<li>b. iPhone 5S with 32 GB memory<\/li>\n\t<li>c. iPhone 5C with 16 GB memory<\/li>\n\t<li>d. iPhone 5C with 32 GB memory<\/li>\n<\/ul>\n3. Which phone model is most profitable for Apple?\n\n4. Apple has made a conscious decision to not make its phones\u2019 memory cards swappable (i.e., the phone owner cannot purchase a larger memory card at a later date to give the phone more memory). \u00a0The consumer must upgrade to an entire new phone if additional memory is needed at a later date. \u00a0Why do you think Apple has made this choice? \u00a0Do you think Apple\u2019s decision is ethical and sustainable? \u00a0Provide your rationale for your answer.\n\n<\/div>","rendered":"<h1 class=\"title\">What is the gross margin on the Apple iPhone 5S and\u00a05C?<\/h1>\n<div class=\"entry\">\n<p><a href=\"http:\/\/wtietz.files.wordpress.com\/2013\/10\/iphone5.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-medium wp-image-186\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/1263\/2016\/12\/05195838\/iphone5.jpg\" alt=\"iphone5\" width=\"300\" height=\"275\" \/><\/a>According to the <a href=\"http:\/\/www.gottabemobile.com\/2013\/09\/10\/iphone-5s-iphone-5c-off-contract-price\/\" target=\"_blank\">GottaBe Mobile website<\/a> in September 2013, the Apple iPhone 5S with 16 GB memory sells off-contract for $649, while the iPhone 5C with 16 GB memory sells off-contract for $549. \u00a0The same phones with 32 GB memory sell off-contract for $749 and $649.<\/p>\n<p>According to<a href=\"http:\/\/www.businessweek.com\/articles\/2013-09-26\/apples-memory-price-markup-for-iphones-ipads-swells-its-profit\" target=\"_blank\"> Bloomberg Businessweek and IHS iSuppli,<\/a> the iPhone 5S model with 16 GB memory costs $199 to produce. \u00a0IHS iSuppli also reports that the 5C model of the iPhone (also with 16 GB of memory) costs $166 to produce. \u00a0An extra 16 GB of memory for each phone (to bring it to a total of 32 GB memory) costs Apple about <a href=\"http:\/\/www.businessweek.com\/articles\/2013-09-26\/apples-memory-price-markup-for-iphones-ipads-swells-its-profit\" target=\"_blank\">$0.71 per GB<\/a>.<\/p>\n<p><strong>Questions<\/strong><\/p>\n<p>1. Calculate the gross margin (or profit)\u00a0in dollars for each of the following phone models\/configurations:<\/p>\n<ul>\n<li>a. iPhone 5S with 16 GB memory<\/li>\n<li>b. iPhone 5S with 32 GB memory<\/li>\n<li>c. iPhone 5C with 16 GB memory<\/li>\n<li>d. iPhone 5C with 32 GB memory<\/li>\n<\/ul>\n<p>2. Calculate the gross margin in percentage (gross margin in dollars \/ sales) for each of the following phone models\/configurations:<\/p>\n<ul>\n<li>a. iPhone 5S with 16 GB memory<\/li>\n<li>b. iPhone 5S with 32 GB memory<\/li>\n<li>c. iPhone 5C with 16 GB memory<\/li>\n<li>d. iPhone 5C with 32 GB memory<\/li>\n<\/ul>\n<p>3. Which phone model is most profitable for Apple?<\/p>\n<p>4. Apple has made a conscious decision to not make its phones\u2019 memory cards swappable (i.e., the phone owner cannot purchase a larger memory card at a later date to give the phone more memory). \u00a0The consumer must upgrade to an entire new phone if additional memory is needed at a later date. \u00a0Why do you think Apple has made this choice? \u00a0Do you think Apple\u2019s decision is ethical and sustainable? \u00a0Provide your rationale for your answer.<\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-128\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>What is the gross margin on the Apple iPhone 5S and 5C?. <strong>Authored by<\/strong>: Dr. Wendy Tietz, CPA, CMA, CGMA. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/accountingintheheadlines.com\">http:\/\/accountingintheheadlines.com<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc\/4.0\/\">CC BY-NC: Attribution-NonCommercial<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":26,"menu_order":9,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"What is the gross margin on the Apple iPhone 5S and 5C?\",\"author\":\"Dr. Wendy Tietz, CPA, CMA, CGMA\",\"organization\":\"\",\"url\":\"http:\/\/accountingintheheadlines.com\",\"project\":\"\",\"license\":\"cc-by-nc\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-128","chapter","type-chapter","status-publish","hentry"],"part":118,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/chapters\/128","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/wp\/v2\/users\/26"}],"version-history":[{"count":1,"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/chapters\/128\/revisions"}],"predecessor-version":[{"id":307,"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/chapters\/128\/revisions\/307"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/parts\/118"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/chapters\/128\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/wp\/v2\/media?parent=128"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/pressbooks\/v2\/chapter-type?post=128"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/wp\/v2\/contributor?post=128"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tc3-accounting1\/wp-json\/wp\/v2\/license?post=128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}