PA1 – Managerial Accounting | Westcliff University

Note: Only for reference

Apple Inc. is primarily considered and viewed as a manufacturing company but it is also taking a decisive step toward forming a service company as well. Apple Inc. offers various products to its customers like iPhone, iPad, iPod, Apple watch, and Mac computer, etc. Along with the products, it also offers services like iTunes, iCloud, Apple TV and App Store (France-Presse, 2016).

Google Inc. is basically a service company which provides Internet-based services like Gmail, Search Engine, cloud computing, Google Talk, AdSense, Google Analytics, etc. Google Pixel, Google Pocophone, VR, VR Box, etc. are some of the products that are produced by Google Inc. for the people around the world.

Both Apple Inc. and Google Inc. provides a variety of product and services but Apple Inc. is more centered toward manufacturing activities as the major source of income comes from selling products. And Google Inc. is more centered toward service-related activities which are the primary source of income for this Company.

ACTIVITIES AT APPLE INC. AND GOOGLE INC. THAT CAUSES COST

The various activities that cause cost at Google Inc. are Research and Development, and Sales and Marketing expenses whereas in case of Apple Inc. the activities causing cost are product manufacturing costs and Research and Development(R and D) which has been analyzed after looking the financial statements of both of the companies.

Yes, I believe both of the companies Apple Inc. and Google Inc. ought to be worried about controlling activities that create cost. In both case of Google Inc. spending such a huge amount in R and D is not yielding the amount of profit it should have earned (Truong, 2014).For Apple, activity related to manufacturing costs needed to be controlled properly analyzing the cost and associated revenues with it regarding whether to use the capital intensive or labor-intensive technique.

 

RESEARCH AND DEVELOPMENT EXPENSES RELATIVE TO REVENUE

 

Company

Activity

(Research and Development)

 

% of Revenue

Apple Inc.

6 Billion USD

3%

Google Inc.

9.8 Billion USD

14.90%

(Source: https://www.theatlas.com/charts/N1Gs8E4v)

SUMMARY AND CONCLUSION

After analyzing the financial statements of both the companies, different activities that cause the cost to these companies identified and analyzed. These companies need to be concerned about the cost that they are allocating in those activities as per the level of value added by these activities towards the company.

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PA1 MA Final

Author: Smirti

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