Cost Accounting Report: Analysis of Apple Inc.'s Cost Accounting

This report provides a comprehensive analysis of Apple Inc.'s cost accounting practices. It begins with an introduction to the company, its organizational structure, and key executives. The report delves into Apple's value chain, highlighting inbound and outbound logistics, production processes, and the principle of substitution. It then examines the company's planning strategies, focusing on product experience, customer curiosity, and its strong vision. The report also explores controlling measures, including quality standards and scheduling. Furthermore, it discusses the implementation of a balanced scorecard to evaluate performance. Finally, the report assesses Apple's decision-making capabilities, offering recommendations based on its findings.

Running head: COST ACCOUNTING
Cost Accounting
Name of the Student:
Name of the University:
Author Note

1COST ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Apple Inc.........................................................................................................................................3
Value Chain.....................................................................................................................................6
Planning...........................................................................................................................................6
Controlling.......................................................................................................................................7
Implementation of the Balanced Scorecard in Apple Inc................................................................8
Decision-making..............................................................................................................................9
Recommendation and Conclusion...................................................................................................9
References......................................................................................................................................11

2COST ACCOUNTING
Executive Summary
Steve Jobs and Steve Wozniak had founded Apple in the year of 1976. The current Chief
Executive Officer of the company is Tim Cook.
This particular study aims to look into the organizational structure of Apple Inc. The
value chain of the manufacturing has also been discussed. Lastly, two situations have been
identified when the planning, controlling and decision-making by the management of the
company has been displayed and evaluated accordingly. Furthermore, particular
recommendations have also been provided in regards to the selected company.

3COST ACCOUNTING
Introduction
The issue that has been presented in the question is that an overview into a manufacturing
company has been asked to provide. This particular study aims to focus on the managerial
accounting techniques undertaken by the selected company. This particular task has been carried
out by the scrutiny of the annual report of the selected company and other related documents.
The particular company that has been chosen for the purpose of the study is Apple. It has been
asserted by the management of the company that the products offered by this particular
multinational company have been designed in such a way that these particular products blend
with the lifestyle of the clients and customers.
This particular study aims to look into the organizational structure of Apple Inc. The
value chain of the manufacturing has also been discussed. Lastly, two situations have been
identified when the decision-making by the management of the company has been displayed and
evaluated accordingly. Furthermore, particular recommendations have also been provided in
regards to the selected company.
Apple Inc.
Apple had been founded in the financial year of 1976. This was one of the first
technological companies that had been started with the primary aim to serve the individual
customers rather than the large computers. Steve Jobs and Steve Wozniak had founded the
corporate entity in the year of 1976. The current Chief Executive Officer of the company is Tim
Cook. A formal structure in regards to the management of the company has been laid down
(Ramesh and Andrews 2015).
Executive Profiles Functions
Tim Cook Chief Financial Officer
Katherine Adams Senior Vice President and General Counsel
Angela Ahrendts Senior Vice President Retail
Eddy Cue Senior Vice President Internet Software and

4COST ACCOUNTING
Services
Craig Federighi Senior Vice President Software Engineering
Jonathan Ive Chief Design Officer
Luca Maestri
Senior Vice President and Chief Financial
Officer
Dan Riccio
Senior Vice President Hardware
Engineering
Philip W. Schiller Senior Vice President Worldwide Marketing
Johny Srouji
Senior Vice President Hardware
Technologies
Jeff Williams Chief Operating Officer
Board of Directors
Steve Dowling
Lisa Jackson
Isabel Ge Mahe
Tor Myhren
Deirdre O'Brien
The major products offered by this particular company are as follows:
 iPhone
 iPad
 Macintosh
 Apple Watch
 macOS
 iOS

5COST ACCOUNTING
 Final Cut Pro
 Keynote
 Logic Pro
 macOS Sierra
 Pages
 iOS 10
 Numbers
 iLife
Apple had been initially founded to meet up to the individual computing needs of
students, creative professionals, educators and other consumers all over the world. Their value
statement had been, integrating the application of the computers to the average users. The
management of the company strives towards continuously innovate the offered products. The
mission and vision statement of Apple has been establishing itself as the potential symbol of
innovation and elegance. However, it should be noted here that the mission statement of Apple
has been further changed and modified in order to suit the changing market conditions and
trends. The current mission statement indicates the financial performance of the company in
regards to details about certain lines of products that have been included to show the current
condition of the firm. The vision statement of the corporate entity is comprehensive and
contextual and provides a clarified image in regards to the mission statement of the company.
The statement also displays a higher degree of suitability to the current condition of the
company. However, there are certain areas in which the mission statement can improve. To be
more precise, more information could be provided pertaining to the fields of product innovation
and market leadership (Kuglin, Crosser and Haynes 2017).
The line and staff function of the organization possesses the required skills for facilitating
the successful operation of business. Apple promotes a functional organization. This fact is
further supported by the executive skills that is possessed by the directors of the company. The
diversity of the executive profiles also lead to the formation of functions that are common to
every product line (Hennessy and Najjar 2017).

6COST ACCOUNTING
Value Chain
The analysis of the value chain strategy that is adopted by Apple gives an overview into
the marketing strategy that is followed by this corporate entity in order maintain a continuous
stream of inflow of revenue. Apple follows the principle of substitution. This means that the
organization has always maintained a continuous substitution of their, own products. This has
not only facilitated the sufficient innovation of the products but also enabled the organization to
acquire a leadership position in the market (Hennessy and Najjar 2017). Apple highlights a
significant value chain due to the following reasons:
 Inbound logistics of the firm has been of high degree of quality
 The processes in relation to production are developed and innovated from time to time in
order to add value to the offered products of the firm
 Outbound logistics of the corporate entity also maintain an improved standard
Therefore, as can be deduced from the discussion in the preceding paragraphs, the
operating structure of Apple reflects a value chain of high quality. This has been essentially
facilitated by the aggressive campaigning, slick looking products, creation of heavy buzz in the
market prior to the launching of a new product. Moreover, the degree of innovation that has been
incorporated into the products majorly contributes to the elevation of the value chain of the
offered products by the firm. Moreover, the after sales service facilities provided by this
particular entity also enhance the value chain of Apple (Goetsch and Davis 2014).
Planning
Apple primarily focuses on management planning and intends to create defined strategies
in relation to planning. These strategies can be listed down as follows:
 Focusing on the product experience by the consumers – The management of Apple
engages in the continuous innovation and substitution of the products. Prior to the phase
of marketing the products, the corporate entity involves in rigorous scrutiny of the
product in terms of customer use. Moreover, the substitution principle involves the
incorporation of the customer complaints, which further improves the products and
enhances the suitability of the selected products to its users (Chambers 2014).

7COST ACCOUNTING
 Generation of curiosity among the customers – The marketing department of this
particular corporate entity follows a unique strategy. This particular strategy aims at
generating curiosity among the public by launching short-term teasers about the products.
With the help of such a planning strategy the management of the organization can
effectively determine the number of the products that will be launched in the market in
order to maintain the already generated curiosity among the public (Chambers 2014)..
 Strong vision – The strong vision that has been promoted by the organization interprets
the mission of the organization to produce such tools for the mind that advance
humankind. One such example has been MacBook. Thus, the innovation of the products
in order to facilitate multitasking is one of the important planning steps that results in
incurring of increased revenue (Chambers 2014).
Apple focuses on a limited number of products and strives to develop these handful
numbers of products in order to acquire the top position in the market. The firm primary focuses
on the component of customer excellence, product excellence and operational excellence, which
helps the entity to maintain top position in, regards to the competitor firms like Microsoft and
Sony. Furthermore, the organization has been able to maintain a brand name, which provides the
business with required strength; the company also, offers a repository of innovative products that
further strengthens its competitive position (Pisano 2015).
The information that is significantly required for preparing a manufacturing or selling
budget in case of the chosen company is the particulars that are required in the production of the
offered products. A detailed overview into each of the products, manufactured by Apple will also
help in ascertaining the cost of the implemented technology in the products which will result in
the identification of the crucial costs. This will in turn aid the process of preparation of the
budgets.
Controlling
The process of controlling can be effectively defined with the help of some of the
strategies that has been undertaken by the company in regards to the products and other related
production processes (Hennessy and Najjar 2017). Some of these strategies are as follows:

8COST ACCOUNTING
 The various processes that are utilized in the production of the Apple products are passed
down through a number of organizational components and officials. For instance, a
particular product like MacBook before getting launched into the market is authorized by
a number of officials like the Senior Vice President for Mac Hardware Engineering and
Vice President for Software Engineering.
 The management of the business operations have been further controlled by the
establishment of proper quality standards within the organization. The senior executive in
regards to operations in Apple coordinate with eight other senior Vice Presidents in order
to make sure that the products adhere to the quality standards. Furthermore, this
manufacturing company is known for quality standards that is not only restricted to the
products but also product design, online and retail marketing and human resource
management.
 Scheduling – Apple Inc. undertakes the controlling decisions in regards to the
management of the operations through a number of manual and automated processes. The
automated processes are used for the purpose of regulating the business activities and
other associated processes of production. Nevertheless, the manual processes that is
utilized by the management of the corporate entity is restricted to the outlets or the Apple
stores. The scheduling of the operations management is primarily carried out in order to
maximize the utilization capacity of the technological equipments, human resources and
facilities.
Implementation of the Balanced Scorecard in Apple Inc
A balanced scorecard refers to the management tool that is developed for measuring the
performance of a firm (especially the non-financial performance) by the identification and the
evaluation of the key performance indicators of the respective business. The singular motive
behind the preparation of the balanced scorecard is that the judgment of the performance of a
company based on financial metrics only does not provide the correct overview into the
company. Thus, it is necessary to implement and utilize a balanced scorecard in a corporate
organization. In case of Apple Inc. a balanced scorecard with the four perspectives of financial,
customer, process and learning and growth can be implemented in order to evaluate the non-
financial performance of the company (den Hartigh caes et al., 2016).

9COST ACCOUNTING
The key performance indicators in case of the financial perspective might be the net
revenue incurred by the firm and other significant ratios like liquidity ratio and gearing ratio. The
key performance indicators in relation to the customers might be the percentage of customer
satisfaction achieved, customer loyalty and feedback and number of new customers acquired per
product. The perspective of process can be evaluated with the help of cost of the incurred
process, necessity of the process, substitution of the adopted process and scope of improvement.
Lastly, the derived outcome from all these perspectives can be included under learning and
growth for this particular manufacturing company (den Hartigh caes et al., 2016).
Decision-making
The decision-making capability of this particular corporate entity can be evaluated by the
following listed down situations:
 The particular strategy to utilize Microsoft as an ally instead of a competitor provides
enough overview into the strategic planning of the management of this manufacturing
company. Apple and Microsoft decided to ally each other so that the products like iMacs
could utilize the Microsoft Windows software and in return, Microsoft had to invest $150
million in the new product of the company. Such a decision-making had been hugely
beneficial for the company (Mardani 2015).
 Tim Cooks, the present CEO of the company has enabled the company to touch new
horizons. The particular decisions that have been beneficial for the company are the shift
from Apple to Apple 2. The three particular strategies that had brought further success
are the decision to carry forward the innovation in the products, the expansion of the
existing customer base and the continuous implementation of technological innovation in
the products (Mardani 2015).
Recommendation and Conclusion
Thus, as it can be concluded from the discussion in the preceding paragraphs, Apple Inc.
as a manufacturing company has been performing well. Moreover, the firm has been ruling the
top position in the market majorly due to the customer and product excellence that it strives to
maintain. The fact that Apple focuses on a handful number of products also enables the company

10COST ACCOUNTING
to utilize the benefit of standardization of raw materials and thus achieve economies of scale.
This will enable the corporate entity to reach greater heights.

11COST ACCOUNTING
References
Arthur, C., 2014. Digital wars: Apple, Google, Microsoft and the battle for the Internet. Kogan
Page Publishers.
Chambers, M., 2014. Reflections on Computers in Education 1984–2001: The Logo Continuum.
In Reflections on the History of Computers in Education (pp. 365-372). Springer, Berlin,
Heidelberg.
den Hartigh, E., Ortt, J.R., van de Kaa, G. and Stolwijk, C.C., 2016. Platform control during
battles for market dominance: The case of Apple versus IBM in the early personal computer
industry. Technovation, 48, pp.4-12.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Hennessy, J. and Najjar, A., 2017. Apple Computer, Inc.: Think Different, Think Online Music.
Kellogg School of Management Cases, pp.1-24.
Kuglin, C., Crosser, R.L. and Haynes, J.J., 2017. Apple, Inc., the UAE, and Joplin, Missouri: An
Ethical Opportunity?. Journal of Critical Incidents, 10.
Mardani, A., Jusoh, A., MD Nor, K., Khalifah, Z., Zakwan, N. and Valipour, A., 2015. Multiple
criteria decision-making techniques and their applications–a review of the literature from 2000 to
2014. Economic Research-Ekonomska Istraživanja, 28(1), pp.516-571.
Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.
Ramesh, N. and Andrews, J., 2015. Personalized search engine using social networking activity.
Indian Journal of Science and Technology, 8(4), p.301.
Rawassizadeh, R., Price, B.A. and Petre, M., 2015. Wearables: Has the age of smartwatches
finally arrived?. Communications of the ACM, 58(1), pp.45-47.