1. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. What is the gross margin on the Apple iPhone 5S and 5C? Original blog posting (October 29, 2013)

2. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. A 16GB Apple iPhone 5S and 5C sell off- contract for $649 and $549, respectively iPhone 5S model with 16 GB memory costs $199 to produce iPhone 5C model with 16 BG memory costs $166 to produce An extra 16 GB of memory for each phone costs Apple about $0.71 per GB

3. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 1 Calculate the gross margin in dollars for each of the following phone models/configurations: iPhone 5S with 16 GB memory iPhone 5S with 32 GB memory iPhone 5C with 16 GB memory iPhone 5C with 32 GB memory

4. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 2 Calculate the gross margin in percentage for each of the following phone models/configurations: iPhone 5S with 16 GB memory iPhone 5S with 32 GB memory iPhone 5C with 16 GB memory iPhone 5C with 32 GB memory

5. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 3 Which phone model is most profitable for Apple?

6. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 4 Apple has made a conscious decision to not make its phones’ memory cards swappable (i.e., the phone owner cannot purchase a larger memory card at a later date to give the phone more memory). The consumer must upgrade to an entire new phone if additional memory is needed at a later date. Why do you think Apple has made this choice? Do you think Apple’s decision is ethical and sustainable? Provide your rationale for your answer.

7. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question Recap 1.Calculate the gross margin in dollars for each of the following phone models/configurations: iPhone 5S with 16 GB memory iPhone 5S with 32 GB memory iPhone 5C with 16 GB memory iPhone 5C with 32 GB memory 2.Calculate the gross margin in percentage for each of the following phone models/configurations: iPhone 5S with 16 GB memory iPhone 5S with 32 GB memory iPhone 5C with 16 GB memory iPhone 5C with 32 GB memory 3.Which phone model is most profitable for Apple? 4.Apple has made a conscious decision to not make its phones’ memory cards swappable (i.e., the phone owner cannot purchase a larger memory card at a later date to give the phone more memory). The consumer must upgrade to an entire new phone if additional memory is needed at a later date. Why do you think Apple has made this choice? Do you think Apple’s decision is ethical and sustainable? Provide your rationale for your answer.

8. Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Related video resources can be found at http://www.youtube.com/user/accountingheadlines Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.eduhttp://accountingintheheadlines.com/ http://www.youtube.com/user/accountingheadlines wtietz@kent.edu