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Apple iPhone Cost Structure - Coggle Diagram
Apple iPhone Cost Structure
BEHAVIOR
Fixed
Tim Cook’s executive salary
Depreciation of manufacturing robots
Why:
These costs remain constant regardless of how many iPhones Apple produces in the short term. Even if production increases or decreases, these expenses must still be paid, so they do not vary with output.
Variables
Microprocessors used in iPhones
Packaging materials
Why:
These costs change directly with production volume. Each additional iPhone requires components and packaging, so the total cost increases as more units are produced.
FUNCTION
Production
Electricity used in assembly facilities
Factory building insurance
Why:
These costs are necessary to manufacture the iPhone and maintain production operations. They are directly related to the factory and production environment.
Administrative & Financial
Advertising campaign for new iPhone
Customer technical support operations
Why:
These costs support management, marketing, and customer service activities rather than manufacturing. They help operate the business and generate sales but are not part of the production process.
IDENTIFICATION
Direct
Microprocessors used in iPhones
Packaging materials
Why:
These costs can be clearly traced to each individual iPhone produced. Apple can measure exactly how much of each component is used per unit, making them essential for calculating unit cost.
Indirect
Factory security services
Salary of production supervisor
Why:
These costs support the overall production process but cannot be traced to a single iPhone. They must be allocated across total production as overhead.
APPLICATION TIME
Product
Depreciation of manufacturing robots
Electricity used in assembly facilities
Why:
These costs are part of manufacturing and become included in the inventory value of iPhones. They only affect profit when the product is sold, as part of cost of goods sold.
Period
Advertising campaign
Tim Cook’s executive salary
Why:
These costs are expensed in the period incurred because they are not directly tied to producing one unit. They relate to administration, strategy, and sales activities rather than inventory.