Apple Inc.’s Managerial Accounting Conceptual Model

The purpose of the give memo is to describe the decision-making process for the innovation to be implemented in Apple. The proposed change for the company is releasing a new iPhone lineup with an OLED feature, improved water resistance, better shatter resistance, and a wide-angle camera. Devices will be presented in three different sizes, which are 6.1 inches, 5.5 inches, and 4.7 inches, and five colors, which are black, white, blue, purple, and red. All iPhones in this lineup will have a new bilateral wireless charging feature.

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The current operations of the company should be viewed as a baseline for the further decision-making process. To perform the analysis on the proposed change, information about the inputs, such as resources, operational quantities, and costs, needs to be collected (Atrill & McLaney, 2017). In particular, it is crucial to gather cost information about the use of Apple’s workers, machinery, IT, raw materials, buildings, and capital. Apple’s 10-K form has to be used for a detailed analysis of the consolidated statement of cash flows and stockholders’ equity. For example, in 2018, the company had a high return on investments of 55.5% and was able to meet its debt obligations successfully (Apple Inc., 2018, p. 28). Considering the high value of net income, coupled with a large positive value of cash generated from operating activities, Apple may not need borrowing for the change implementation. Quantitative data about the consumption of resources should be gathered, as it will form the basis for calculating managerial costing monetary information. Ideally, all the findings will explicitly indicate cause-and-effect relationships between resources utilized by Apple.

Then, the managerial objectives (or desirable outputs) ought to be clearly articulated. Specifically, a product cost has to be determined depending on the estimated direct labor costs, direct material costs, and manufacturing overhead costs (Hancock, Bazley, & Robinson, 2015). Along with cost analysis, avoidable and unavoidable costs will be outlined. Other characteristics that need to be identified include homogeneity, traceability, work, and capacity. A better understanding of the target audience and the competitive landscape will be obtained through thorough market research.

The scope of the analysis is defined by its depth and breadth. There will be four value chain optimization areas, which are sourcing inputs, applying inputs in conversion, producing new outputs, and realizing gain from enterprise outputs. Even though the change will not involve entering new markets, it will require the use of new technologies, which is why the breadth of the analysis scope is considerable (The Institute of Management Accountants, 2014). As to the depth of the analysis, decision-process information should comprise the full costs construct. Parameters that will be used to determine whether the proposed change is worth implementing include avoidability of inputs, divisibility of resources, the interdependence of managerial objectives, the costs for the managerial objectives discussed above, and anticipated gains. Finally, the interchangeability of resources needed for achieving the desired objectives has to be assessed.


  1. Apple Inc. (2018). Form 10-K. Web
  2. Atrill, P., & McLaney, E. J. (2017). Accounting and finance for non-specialists (10th ed.). Harlow, UK: Pearson Education.
  3. Hancock, P., Bazley, M. E., & Robinson, P. (2015). Contemporary accounting: A strategic approach for users (9th ed.). South Melbourne, Australia: Cengage Learning Australia.
  4. The Institute of Management Accountants. (2014). The conceptual framework for managerial costing. Web
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