Apple's Product Pricing

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1.The company that I have selected is Apple. This company designs and markets consumer electronics products. Manufacturing is done by third party companies. Apple's products are highly-integrated. This means that any given product will be a combination of the work of hardware engineers, numerous software engineering projects, industrial design and marketing teams. Applying cost factors to the different divisions is a challenge because of this. In addition, some products are produced by piggybacking on other technology. The mobile operating iOS operating system used on the iPad, for example, would have been an adaptation of the same iOS that was used for the iPhone a couple of years previous. This presents a challenge for cost allocation, because the iOS development cost would have been lower for the iPad as it was based on pre-existing technology. The company's current approach to costing is to consider many such costs as overhead, placing them under the different functional categories. The products in that case would have a high contribution margin that would serve to cover the fixed costs associated with research and development on various individual product attributes. This system reflects the "suite of products" that Apple utilizes. The basic iOS architecture would be an overhead component, and only the adaptation of that to the different products (iPod Touch, iPhone, iPad, etc.) would be allocated to that product. The approach is made more feasible by Apple's

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