Statement of cash flows
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81554_1439765_Ch14CashFlow.pptxStatement of Cash Flows
Chapter 14
CLASSIFY AS:
OPERATING, INVESTING, OR FINANCING.
In use,
Long-term = Non-current, e.g. LT Assets = Non-current Assets
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Copyright © 2015 by McGraw-Hill Education. All rights reserved.
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Cash flow Overview
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"Apple Inc.--CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions“---continued 2 of 2
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Cash [as used in CF Statement]
The term cash on the statement of cash flows refers broadly to both currency [cash] and cash equivalents.
Cash
or Cash Equivalents
T-bills
Money Market Funds
Commercial Paper
Currency and Bank Accounts
Marketable
Securities
ST Investments
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In a statement of cash flows, cash is broadly defined to include both cash and cash equivalents.
Cash equivalents consist of short-term, highly liquid investments, such as Treasury Bills, commercial paper, and money market funds.
These short-term liquid assets are usually included in marketable securities on the balance sheet.
External Reports [ 4 SEC ]
Income Statement
Balance Sheet
Statement of Cash Flows
The Statement of Cash Flows highlights the major activities that impact cash flows and hence, affect the overall cash balance.
Statement of OEq or Retained Earnings
OCI may be in IS [4] or separate OCI then [5]
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Three major financial statements are required for external reports—an income statement, a balance sheet, and a statement of cash flows. The statement of cash flows highlights the major activities that impact cash flows and hence, affect the overall cash balance.
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STATEMENT OF CASH FLOWS
4th financial statement: after other IS, BS, RE completed [5th statement-OCI ACC310/311]
Explains...
What the business did to generate [sources] cash and
How the cash was used [uses]
Categorizes all cash transactions into three types:
Operating: run the business – profit/loss- IS & working capital [CA – CL] related; includes income taxes
Investing funds: buy / sell long term assets [NCA]
Financing: funds from/to 3rd parties equity or debt [NCL / Equity not IS]
Cash is
KING
Purpose of the Statement of Cash Flows To answer
Are cash flows sufficient to support ongoing operations?
Can we meet our obligations to creditors?
Can we pay dividends?
Why is there a difference between net income and net cash flow?
Will the company have to borrow money to make needed investments?
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The statement of cash flows can be used to answer crucial questions such as:
Are cash flows sufficient to support ongoing operations?
Will the company be able to repay its debts?
Will the company be able to pay its usual dividend?
Why do net income and net cash flow differ?
Will the company have to borrow money to make needed investments?
A Fundamental Principle
Cash Balance = Noncash Balance Sheet Accounts
This principle ensures that properly analyzing the changes in all noncash balance sheet accounts always quantifies the cash inflows and outflows that explain the change in the cash balance.
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Managers prepare the statement of cash flows by applying a fundamental principle of double-entry bookkeeping—the change in the cash balance must equal the changes in all other balance sheet accounts besides cash. This principle ensures that properly analyzing the changes in all noncash balance sheet accounts always quantifies the cash inflows and outflows that explain the change in the cash balance.
A Review of Basic Equations
Basic Equation for Asset Accounts & Contra Liability & Contra Equity [Dr. = normal balance]
Beginning balance + Debits – Credits = Ending balance
Basic Equation for Contra-Asset, Liability, and Stockholders’ Equity Accounts [Cr. = normal balance]
Beginning balance – Debits + Credits = Ending balance
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Before delving into the specifics of how to prepare the statement of cash flows, we need to review two basic equations that apply to all asset, contra-asset, liability, and stockholders’ equity accounts.
First, is the basic equation for asset accounts: Beginning balance + Debits – Credits = Ending balance
Second, is the basic equation for contra-asset, liability, and stockholders’ equity accounts: Beginning balance – Debits + Credits = Ending balance
These equations will help you compute various cash inflows and outflows that are reported in the statement of cash flows and they’ll be referred to throughout the chapter.
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Direct Method & Indirect Method
Indirect:
Trace changes in balance sheet line items
Use Income Statement [part of RE on BS] for Net Income (or IS accounts), Depreciation/Amortization
Adjust Net income for transactions which affected non-current assets or liabilities
Direct
Transaction Analysis: Trace use of cash as you would do through checkbook – what did you spend money on
WE WILL ONLY COVER
INDIRECT METHOD
Terms
Amortization
Depreciation
Gain/Loss Sales of Fixed Assets
BookValue = Cost - AccumulatedDepreciation
Out of Period [examined & properly classified]
Operating [NI + Non-cash chgs. to IS +/- Gain/Loss Sales of Fixed Assets]
Financing [LT Liabilities + Equity other than RE]
Investing [LT Assets]
Organizing a Statement of Cash Flows
Operating Activities
Revenue and expense [IS] transactions that affect net income and Working Capital ∆.
Investing Activities
Acquiring or disposing of noncurrent assets [NCA aka LongTerm assets].
Financing Activities
Borrowing from and repaying principal to creditors [NCL]and transactions with stockholders. [Eq]
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To make it easier to compare data from different companies, U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) require companies to follow prescribed rules when preparing the statement of cash flows. One of these rules requires organizing the statement into three subsections that report cash flows resulting from operating activities, investing activities, and financing activities.
Operating activities generate cash inflows and outflows related to revenue and expense transactions that affect net income.
Investing activities generate cash inflows and outflows related to acquiring or disposing of noncurrent assets such as property, plant, and equipment, long-term investments, and loans to another entity.
Financing activities generate cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company’s owners, such as selling or repurchasing shares of common stock and paying dividends.
Cash Flow Statement: Cash from Activities
Statement of Income:
Net Income (from Continuing Operations;
exclude gains/loses sale of non-current assets))
Non-cash Expenses
Balance Sheet
Assets
Current Assets
Non-Current Assets
Liabilities
Current Liabilities
Non-Current liabilities
Equity:
Capital
Retained earning .
[Dividends are Fin. BUT I.S. is Operating]
Operating
Investing
Financing
Simplified
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BS Categories
Increase = increase
Increase = decrease
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BS Categories
Select Transactions Statement of Cash Flows
Cash UP Cash Down
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Exceptions [1]: CF
Notes payable are financing even if short term
Other income: Gains/Losses on sale of non-current assets-Investing: example follows
Taxes: slide follows
Current portion long term debt is Financing even though current liability
Cannot NET repayment of debt & acquisition of new debt even though netted on BS
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Exceptions[2]: Operating; Gains / Losses
Gains & Losses relating to Sales of Non-current Assets are NOT operating even though they appear on the Income Statement;
Gains & Losses are Investing as the acquisitions were investing so the sale of the invested assets [ the gain or loss ] are investing
Subtract gains from NI; add Losses to NI
Example follows
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Exceptions[3]:Operating;Tax Assets/Liablities
Deferred tax assets are Operating not investing
Deferred tax liabilities are Operating not financing
Deferred tax assets arise from GAAP tax expense being less than tax liability
Deferred tax liability arise from GAAP tax expense being greater than tax liability
While balance may never = zero, these are timing differences which for each item considered move to zero – excluding permanent differences..\..\..\Teaching aids\Other\Permanent Differences.doc
The Indirect Method: A Three-Step Process: from Financial statement: IS & BS
Step 1
Step 2
Step 3
Changes in CA & CL except changes in Cash, Tax assets/liabilities, NOT LT debt are Operating
Changes in LT Liabilities & Equity except RE are Financing
Changes in LT Assets are Investing; Remove Gains/losses in sale LT assets from operating [IS]
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The indirect method adjusts net income to net cash provided by operating activities using a three-step process. The first step is to add depreciation charges to net income. The second step is to analyze net changes in noncash balance sheet accounts that impact net income. The third step is to adjust for gains and losses included in the income statement.
Analyze net changes in noncash balance sheet accounts.
Adjust for gains and losses. On IS B4 adjust
Add depreciation & non-cash charges to net income.
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Cash Flow Statement: Operating
Removed gains-subtract or loss-add on sale
Not operating
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Sales of PPE
Cost into service Yr.2xx1 $500,000
Accumulated Depreciation Yr 2xx6 $425,000
Sold for in Yr.2xx6 $ 69,000
Accounting at Sale:
Debit Cash [or Receivable] $ 69,000
Debit Accumulated Deprec. $425,000
Debit Other Expense [Inc.Statement] $ 6,000
[Loss on equipment Sale]
Credit Equipment [Non-Curr. Asset] $500,000
Effect on Cash Flow Statement:
+ the Loss $6000 to Operating Section of CF Statement [if there was a gain you would “-” subtract]
+ the amount sold $69,000 to the Investing section of the CF Statement
Subtract [as usually PPE increases due to purchases, make negative number absolute value greater] the cash effect of the change in PPE
*****{if 2xx0 PPE = $5000,000 and 2xx6 PPE = $5800,000 then the ($800,000) would become ($1300,000)}**** Elaborate
BV=$75K
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BS Categories
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Financing
Exception: Notes payable part of current liabilities is Financing not Operating.
A NOTE is a Financing instrument so Financing even if short term
Exception: Deferred income tax liabilities part of non-current liabilities is Operating
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No Netting
Purchase of Non-current assets [Investing]
minus the change of assets minus the cost of the asset sold
Added Non-current debt [New debt acquired]
plus change in current portion of LT debt plus the change in LT debt plus amount of LT debt repaid
Show both the sale [at sold price] and purchase of Non-current assets
Show both the repayment and the added LT debt
Purchase/Sale of LT Assets show separate
Repayment & New Borrowing of LT Debt show separate
No Netting: Debt
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If Debt decrease $155,000 BUT you acquired $200,000 of New Debt you must have Paid off $355,000 of existing Debt
If Current Potion up $30,000 AND Non-current portion Down $185,000 then Debt Net change is $155,000 in Total
Yr.2
($260,000)
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No Netting example-2 [ LT Debt ]
Yr. 2xx1 Current portion LT debt = $30,000,000
Yr. 2xx1 LT Debt = $65,000,000
Yr. 2xx2 Current portion LT debt = $32,000,000
Yr. 2xx2 LT Debt = $42,000,000
During 2xx2 acquired new debt of $14,000,000
Change in Debt =
Current Portion: + $ 2,000,000
LT Debt: - $23,000,000: Net = ($21,000,000)
BUT added new debt of $14,000,000 & no netting so…
CF Statement show in Financing Section both:
+ New Debt: $14,000,000
Minus Repayment of Debt: ($35,000,000) [this is the change of ($21,000,000) minus [or increase the absolute value of a negative number) the New Debt acquired of $14,000,000
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FINANCING ACTIVITIES
Those transactions dealing with the exchange of cash between the business and its owners [equity] and creditors [non-curr.liab. & current Notes]
Examples:
Capital: Cash from (additional sales of shares or investment by owners are sources “+” of cash)
Buy back [treasury stock] of shares are uses “-” of cash
Owner’s/shareholders’ withdrawals (drawing or dividends are uses “ - ” of cash)
Repay the principal on a loan is a use of cash “ – ”
Acquiring new debt is a Source “+” of cash
External source or repayment to shareholders or buybacks
| Cannot Net Borrowing & Repayments Show each as separate line No Netting show Repay & Acquire New debt separately |
Exception: Deferred tax liabilities are Operating
4/12
Example Equity Changes to Financing
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INVESTING ACTIVITIES
Land, Property,
Machinery, Equipment,
Computers, Furniture,
Fixtures,
Patents, Licenses
Other non-curr. Assets,
Goodwill --COMPANIES
Buy or Sell
◄◄◄◄
Exception: Deferred tax [income taxes] assets are Operating
| Cannot Net Purchase & Sales of LT Assets; show Sale & Purchase separately Show each as separate line |
Increase or decrease
in Non-current assets
$69K + cash source, prior slide
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No Netting example: Sale of LT Assets * *
Sold – BV
$215 - $173
D
C
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Managers can derive many useful insights by studying the statement of cash flows. A statement of cash flows should be evaluated in the context of a company’s specific circumstances. For example, a company with growing sales would understandably have an increase in accounts receivable, inventory, and accounts payable balances. On the other hand, if a company with declining sales has increases in these account balances, it could signal trouble.
Useful information can also be derived by examining the relationships among numbers. For example, some managers study their company’s trends in cash flow margins by comparing the net cash provided by operating activities to sales. The goal is to continuously increase the operating cash flows earned per sales dollar. Managers can also compare the additions to property, plant, and equipment in the investing activities section of the statement of cash flows to the depreciation included in the operating activities section of the statement. If the additions to property, plant, and equipment are consistently less than depreciation, it suggests the company is not investing enough money to maintain its noncurrent assets.
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USE of Direct/Indirect
Nearly all public companies use Indirect [delta BS items adjusted + IS] Method
Most mid-to-large private companies use Indirect Method
Some small companies use Direct [Transactions] Method
Intel
Cash
Flow
Statement
[pg.1 of 2]*
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Intel
Cash
Flow
Statement
[pg.2 of 2]*
*
*
12/31/xxx3 12/31/xxx2 12/31/xxx1
Excel
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Interpreting the Statement of Cash Flows
A statement of cash flows should be evaluated in the context of a company’s specific circumstances.
Start-up, Growth, Mature, Technology, Manufacturing, Declining…
Useful information can also be derived by examining the relationships among numbers.
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Managers can derive many useful insights by studying the statement of cash flows. A statement of cash flows should be evaluated in the context of a company’s specific circumstances. For example, a company with growing sales would understandably have an increase in accounts receivable, inventory, and accounts payable balances. On the other hand, if a company with declining sales has increases in these account balances, it could signal trouble.
Useful information can also be derived by examining the relationships among numbers. For example, some managers study their company’s trends in cash flow margins by comparing the net cash provided by operating activities to sales. The goal is to continuously increase the operating cash flows earned per sales dollar. Managers can also compare the additions to property, plant, and equipment in the investing activities section of the statement of cash flows to the depreciation included in the operating activities section of the statement. If the additions to property, plant, and equipment are consistently less than depreciation, it suggests the company is not investing enough money to maintain its noncurrent assets.
Free Cash Flows
Free cash flow measures a company’s ability to fund its capital expenditures and dividends from its net cash provided by operating activities.
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Free cash flow can be derived from the statement of cash flows. It measures a company’s ability to fund its capital expenditures and dividends from its net cash provided by operating activities. The equation for computing free cash flow is net cash provided by operating activities minus capital expenditures and minus dividends. A positive number indicates that the company generated enough cash flow from its operating activities to fund its capital expenditures and dividend payments. A negative number suggests that the company needed to obtain cash from other sources, such as borrowing money from lenders or issuing shares of common stock, to fund its investments in property, plant, and equipment and its dividend payments.
Free Cash Flows
Free cash flow measures a company’s ability to fund its capital expenditures and dividends from its net cash provided by operating activities.
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Using the equation for free cash flow, we can calculate the free cash flow Apparel Inc. of $93 million, indicating that Apparel generated enough cash flow from its operating activities to fund its capital expenditures and dividend payments.
Earnings Quality
Managers generally perceive that earnings are of higher quality when the earnings:
are not unduly influenced by inflation, FX
are computed using conservative & consistent accounting principles and estimates, and
are correlated with net cash provided by operating activities.
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Managers and investors often look at the relationship between net income and net cash provided by operating activities to help assess the extent to which a company’s earnings truly reflects operational performance. Managers generally perceive that earnings are of higher quality when the earnings: (1) are not unduly influenced by inflation, (2) are computed using conservative accounting principles and estimates, and (3) are correlated with net cash provided by operating activities. When a company’s net income and net cash provided by operating activities move in tandem with one another, it suggests that earnings result from changes in sales and operating expenses. Conversely, if a company’s net income is steadily increasing and its net cash provided by operating activities is declining, it suggests that net income is being influenced by factors unrelated to operational performance, such as nonrecurring transactions or aggressive accounting principles and estimates.
Not covered in this chapter are unrealized [NOT cash affected BUT recorded in Financial Statements] FV adjustments and Other Comprehensive Income in Equity Examples: FV adjustments to investments : Trading securities Available for Sales securities Pension obligations in OCI Foreign Exchange translation adjustments Others These are covered in ACC310/311 Intermediate Acctg.
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Sep. 24, 2016Sep. 26, 2015Sep. 27, 2014
Statement of Cash Flows [Abstract]
Cash and cash equivalents, beginning of the year$ 21,120$ 13,844$ 14,259
Operating activities:
Net income45,68753,39439,510
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization10,50511,2577,946
Share-based compensation expense4,2103,5862,863
Deferred income tax expense4,9381,3822,347
Changes in operating assets and liabilities: [WC]
Accounts receivable, net1,095611(4,232)
Inventories217(238)(76)
Vendor non-trade receivables(51)(3,735)(2,220)
Other current and non-current assets1,090(179)167
Accounts payable1,7915,4005,938
Deferred revenue(1,554)1,0421,460
Other current and non-current liabilities(2,104)8,7466,010
Cash generated by operating activities65,82481,26659,713
Apple Inc.--CONSOLIDATED STATEMENTS OF CASH FLOWS
- USD ($) $ in Millions 1 of 2
12 Months Ended
Document and Entity Information
| Document and Entity Information - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Oct. 14, 2016 | Mar. 25, 2016 | |
| Document And Entity Information [Abstract] | |||
| Document Type | 10-K | ||
| Amendment Flag | false | ||
| Document Period End Date | Sep. 24, 2016 | ||
| Document Fiscal Year Focus | 2,016 | ||
| Document Fiscal Period Focus | FY | ||
| Trading Symbol | AAPL | ||
| Entity Registrant Name | APPLE INC | ||
| Entity Central Index Key | 320,193 | ||
| Current Fiscal Year End Date | --09-24 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Common Stock, Shares Outstanding | 5,332,313 | ||
| Entity Public Float | $ 578,807 |
CONSOLIDATED STATEMENTS OF OPER
| CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Income Statement [Abstract] | |||
| Net sales | $ 215,639 | $ 233,715 | $ 182,795 |
| Cost of sales | 131,376 | 140,089 | 112,258 |
| Gross margin | 84,263 | 93,626 | 70,537 |
| Operating expenses: | |||
| Research and development | 10,045 | 8,067 | 6,041 |
| Selling, general and administrative | 14,194 | 14,329 | 11,993 |
| Total operating expenses | 24,239 | 22,396 | 18,034 |
| Operating income | 60,024 | 71,230 | 52,503 |
| Other income/(expense), net | 1,348 | 1,285 | 980 |
| Income before provision for income taxes | 61,372 | 72,515 | 53,483 |
| Provision for income taxes | 15,685 | 19,121 | 13,973 |
| Net income | $ 45,687 | $ 53,394 | $ 39,510 |
| Earnings per share: | |||
| Basic (in dollars per share) | $ 8.35 | $ 9.28 | $ 6.49 |
| Diluted (in dollars per share) | $ 8.31 | $ 9.22 | $ 6.45 |
| Shares used in computing earnings per share: | |||
| Basic (in shares) | 5,470,820 | 5,753,421 | 6,085,572 |
| Diluted (in shares) | 5,500,281 | 5,793,069 | 6,122,663 |
| Cash dividends declared per share (in dollars per share) | $ 2.18 | $ 1.98 | $ 1.82 |
CONSOLIDATED STATEMENTS OF COMP
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Statement of Comprehensive Income [Abstract] | |||
| Net income | $ 45,687 | $ 53,394 | $ 39,510 |
| Other comprehensive income/(loss): | |||
| Change in foreign currency translation, net of tax effects of $8, $201 and $50, respectively | 75 | (411) | (137) |
| Change in unrealized gains/losses on derivative instruments: | |||
| Change in fair value of derivatives, net of tax benefit/(expense) of $(7), $(441) and $(297), respectively | 7 | 2,905 | 1,390 |
| Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $131, $630 and $(36), respectively | (741) | (3,497) | 149 |
| Total change in unrealized gains/losses on derivative instruments, net of tax | (734) | (592) | 1,539 |
| Change in unrealized gains/losses on marketable securities: | |||
| Change in fair value of marketable securities, net of tax benefit/(expense) of $(863), $264 and $(153), respectively | 1,582 | (483) | 285 |
| Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(31), $(32) and $71, respectively | 56 | 59 | (134) |
| Total change in unrealized gains/losses on marketable securities, net of tax | 1,638 | (424) | 151 |
| Total other comprehensive income/(loss) | 979 | (1,427) | 1,553 |
| Total comprehensive income | $ 46,666 | $ 51,967 | $ 41,063 |
CONSOLIDATED STATEMENTS OF COM4
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Change in foreign currency translation, tax effects | $ 8 | $ 201 | $ 50 |
| Change in fair value of derivatives, tax benefit/(expense) | (7) | (441) | (297) |
| Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit) | 131 | 630 | (36) |
| Change in fair value of marketable securities, tax benefit/(expense) | (863) | 264 | (153) |
| Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit) | $ (31) | $ (32) | $ 71 |
CONSOLIDATED BALANCE SHEETS
| CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Current assets: | ||
| Cash and cash equivalents | $ 20,484 | $ 21,120 |
| Short-term marketable securities | 46,671 | 20,481 |
| Accounts receivable, less allowances of $53 and $63, respectively | 15,754 | 16,849 |
| Inventories | 2,132 | 2,349 |
| Vendor non-trade receivables | 13,545 | 13,494 |
| Other current assets | 8,283 | 15,085 |
| Total current assets | 106,869 | 89,378 |
| Long-term marketable securities | 170,430 | 164,065 |
| Property, plant and equipment, net | 27,010 | 22,471 |
| Goodwill | 5,414 | 5,116 |
| Acquired intangible assets, net | 3,206 | 3,893 |
| Other non-current assets | 8,757 | 5,422 |
| Total assets | 321,686 | 290,345 |
| Current liabilities: | ||
| Accounts payable | 37,294 | 35,490 |
| Accrued expenses | 22,027 | 25,181 |
| Deferred revenue | 8,080 | 8,940 |
| Commercial paper | 8,105 | 8,499 |
| Current portion of long-term debt | 3,500 | 2,500 |
| Total current liabilities | 79,006 | 80,610 |
| Deferred revenue, non-current | 2,930 | 3,624 |
| Long-term debt | 75,427 | 53,329 |
| Other non-current liabilities | 36,074 | 33,427 |
| Total liabilities | 193,437 | 170,990 |
| Commitments and contingencies | ||
| Shareholders’ equity: | ||
| Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued and outstanding, respectively | 31,251 | 27,416 |
| Retained earnings | 96,364 | 92,284 |
| Accumulated other comprehensive income/(loss) | 634 | (345) |
| Total shareholders’ equity | 128,249 | 119,355 |
| Total liabilities and shareholders’ equity | $ 321,686 | $ 290,345 |
CONSOLIDATED BALANCE SHEETS (Pa
| CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowances | $ 53 | $ 63 |
| Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
| Common stock, shares issued (in shares) | 5,336,166,000 | 5,578,753,000 |
| Common stock, shares outstanding (in shares) | 5,336,166,000 | 5,578,753,000 |
| Common stock, shares authorized (in shares) | 12,600,000,000 | 12,600,000,000 |
CONSOLIDATED STATEMENTS OF SHAR
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Millions | Total | Common Stock and Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) |
| Beginning Balances (in shares) at Sep. 28, 2013 | 6,294,494 | |||
| Beginning Balances at Sep. 28, 2013 | $ 123,549 | $ 19,764 | $ 104,256 | $ (471) |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
| Net income | 39,510 | 0 | 39,510 | 0 |
| Other comprehensive income/(loss) | 1,553 | 0 | 0 | 1,553 |
| Dividends and dividend equivalents declared | (11,215) | $ 0 | (11,215) | 0 |
| Repurchase of common stock (in shares) | (488,677) | |||
| Repurchase of common stock | (45,000) | $ 0 | (45,000) | 0 |
| Share-based compensation | 2,863 | $ 2,863 | 0 | 0 |
| Common stock issued, net of shares withheld for employee taxes (in shares) | 60,344 | |||
| Common stock issued, net of shares withheld for employee taxes | (448) | $ (49) | (399) | 0 |
| Tax benefit from equity awards, including transfer pricing adjustments | 735 | $ 735 | 0 | 0 |
| Ending Balances (in shares) at Sep. 27, 2014 | 5,866,161 | |||
| Ending Balances at Sep. 27, 2014 | 111,547 | $ 23,313 | 87,152 | 1,082 |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
| Net income | 53,394 | 0 | 53,394 | 0 |
| Other comprehensive income/(loss) | (1,427) | 0 | 0 | (1,427) |
| Dividends and dividend equivalents declared | (11,627) | $ 0 | (11,627) | 0 |
| Repurchase of common stock (in shares) | (325,032) | |||
| Repurchase of common stock | (36,026) | $ 0 | (36,026) | 0 |
| Share-based compensation | 3,586 | $ 3,586 | 0 | 0 |
| Common stock issued, net of shares withheld for employee taxes (in shares) | 37,624 | |||
| Common stock issued, net of shares withheld for employee taxes | (840) | $ (231) | (609) | 0 |
| Tax benefit from equity awards, including transfer pricing adjustments | $ 748 | $ 748 | 0 | 0 |
| Ending Balances (in shares) at Sep. 26, 2015 | 5,578,753 | 5,578,753 | ||
| Ending Balances at Sep. 26, 2015 | $ 119,355 | $ 27,416 | 92,284 | (345) |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
| Net income | 45,687 | 0 | 45,687 | 0 |
| Other comprehensive income/(loss) | 979 | 0 | 0 | 979 |
| Dividends and dividend equivalents declared | (12,188) | $ 0 | (12,188) | 0 |
| Repurchase of common stock (in shares) | (279,609) | |||
| Repurchase of common stock | (29,000) | $ 0 | (29,000) | 0 |
| Share-based compensation | 4,262 | $ 4,262 | 0 | 0 |
| Common stock issued, net of shares withheld for employee taxes (in shares) | 37,022 | |||
| Common stock issued, net of shares withheld for employee taxes | (1,225) | $ (806) | (419) | 0 |
| Tax benefit from equity awards, including transfer pricing adjustments | $ 379 | $ 379 | 0 | 0 |
| Ending Balances (in shares) at Sep. 24, 2016 | 5,336,166 | 5,336,166 | ||
| Ending Balances at Sep. 24, 2016 | $ 128,249 | $ 31,251 | $ 96,364 | $ 634 |
CONSOLIDATED STATEMENTS OF CASH
| Apple Inc.--CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions 1 of 2 | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Statement of Cash Flows [Abstract] | |||
| Cash and cash equivalents, beginning of the year | $ 21,120 | $ 13,844 | $ 14,259 |
| Operating activities: | |||
| Net income | 45,687 | 53,394 | 39,510 |
| Adjustments to reconcile net income to cash generated by operating activities: | |||
| Depreciation and amortization | 10,505 | 11,257 | 7,946 |
| Share-based compensation expense | 4,210 | 3,586 | 2,863 |
| Deferred income tax expense | 4,938 | 1,382 | 2,347 |
| Changes in operating assets and liabilities: [WC] | |||
| Accounts receivable, net | 1,095 | 611 | (4,232) |
| Inventories | 217 | (238) | (76) |
| Vendor non-trade receivables | (51) | (3,735) | (2,220) |
| Other current and non-current assets | 1,090 | (179) | 167 |
| Accounts payable | 1,791 | 5,400 | 5,938 |
| Deferred revenue | (1,554) | 1,042 | 1,460 |
| Other current and non-current liabilities | (2,104) | 8,746 | 6,010 |
| Cash generated by operating activities | 65,824 | 81,266 | 59,713 |
| Investing activities: | |||
| Purchases of marketable securities | (142,428) | (166,402) | (217,128) |
| Proceeds from maturities of marketable securities | 21,258 | 14,538 | 18,810 |
| Proceeds from sales of marketable securities | 90,536 | 107,447 | 189,301 |
| Payments made in connection with business acquisitions, net | (297) | (343) | (3,765) |
| Payments for acquisition of property, plant and equipment | (12,734) | (11,247) | (9,571) |
| Payments for acquisition of intangible assets | (814) | (241) | (242) |
| Payments for strategic investments | (1,388) | 0 | (10) |
| Other | (110) | (26) | 26 |
| Cash used in investing activities | (45,977) | (56,274) | (22,579) |
| Financing activities: | |||
| Proceeds from issuance of common stock | 495 | 543 | 730 |
| Excess tax benefits from equity awards | 407 | 749 | 739 |
| Payments for taxes related to net share settlement of equity awards | (1,570) | (1,499) | (1,158) |
| Payments for dividends and dividend equivalents | (12,150) | (11,561) | (11,126) |
| Repurchases of common stock | (29,722) | (35,253) | (45,000) |
| Proceeds from issuance of term debt, net | 24,954 | 27,114 | 11,960 |
| Repayments of term debt | (2,500) | 0 | 0 |
| Change in commercial paper, net | (397) | 2,191 | 6,306 |
| Cash used in financing activities | (20,483) | (17,716) | (37,549) |
| Increase/(Decrease) in cash and cash equivalents | (636) | 7,276 | (415) |
| Cash and cash equivalents, end of the year | 20,484 | 21,120 | 13,844 |
| Supplemental cash flow disclosure: | |||
| Cash paid for income taxes, net | 10,444 | 13,252 | 10,026 |
| Cash paid for interest | $ 1,316 | $ 514 | $ 339 |
Summary of Significant Accounti
| Summary of Significant Accounting Policies | 12 Months Ended |
| Sep. 24, 2016 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Apple Inc. and its wholly-owned subsidiaries (collectively “Apple” or the “Company”) designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the Company sells a variety of third-party Apple-compatible products, including application software and various accessories through its retail and online stores. The Company sells to consumers, small and mid-sized businesses and education, enterprise and government customers. Basis of Presentation and Preparation The accompanying consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period’s presentation. The Company’s fiscal year is the 52 or 53 -week period that ends on the last Saturday of September. The Company’s fiscal years 2016 , 2015 and 2014 ended on September 24, 2016 , September 26, 2015 and September 27, 2014 , respectively, and each spanned 52 weeks. An additional week is included in the first fiscal quarter approximately every five or six years to realign fiscal quarters with calendar quarters, which will next occur in the first quarter of the Company's fiscal year ending September 30, 2017. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. During 2016, the Company adopted an accounting standard that simplified the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The Company has adopted this accounting standard prospectively; accordingly, the prior period amounts in the Company’s Consolidated Balance Sheets within this Annual Report on Form 10-K were not adjusted to conform to the new accounting standard. The adoption of this accounting standard was not material to the Company’s consolidated financial statements. Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware. For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations. The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and iBooks Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. Revenue from AppleCare service and support contracts is deferred and recognized over the service coverage periods. AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty. The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Revenue Recognition for Arrangements with Multiple Deliverables For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. For multi-element arrangements accounted for in accordance with industry specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered. For sales of qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential to the functionality of the hardware device delivered at the time of sale. The second deliverable is the embedded right included with qualifying devices to receive on a when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. The third deliverable is the non-software services to be provided to qualifying devices. The Company allocates revenue between these deliverables using the relative selling price method. Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred. The Company’s process for determining its ESP for deliverables without VSOE or TPE considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, product specific business objectives, length of time a particular version of a device has been available, estimated cost to provide the non-software services and the relative ESP of the upgrade rights and non-software services as compared to the total selling price of the product. Shipping Costs Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales. Warranty Costs The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates. Software Development Costs Research and development (“R&D”) costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred. Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Share-based Compensation The Company recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.” Income Taxes The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See Note 5, “Income Taxes” for additional information. Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased by employees under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. The following table shows the computation of basic and diluted earnings per share for 2016 , 2015 and 2014 (net income in millions and shares in thousands): 2016 2015 2014 Numerator: Net income $ 45,687 $ 53,394 $ 39,510 Denominator: Weighted-average shares outstanding 5,470,820 5,753,421 6,085,572 Effect of dilutive securities 29,461 39,648 37,091 Weighted-average diluted shares 5,500,281 5,793,069 6,122,663 Basic earnings per share $ 8.35 $ 9.28 $ 6.49 Diluted earnings per share $ 8.31 $ 9.22 $ 6.45 Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share. Financial Instruments Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method. Derivative Financial Instruments The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period. For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period. Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period. Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ abilities to pay. Inventories Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 24, 2016 and September 26, 2015 , the Company’s inventories consist primarily of finished goods. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one to five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease terms or useful life for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years . Depreciation and amortization expense on property and equipment was $8.3 billion , $9.2 billion and $6.9 billion during 2016 , 2015 and 2014 , respectively. Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2016 , 2015 and 2014 . For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2016 and 2015 , the Company’s goodwill was primarily allocated to the Americas and Europe reporting units. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years . Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. Foreign Currency Translation and Remeasurement The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates. |
Financial Instruments
| Financial Instruments | 12 Months Ended |
| Sep. 24, 2016 | |
| Investments, All Other Investments [Abstract] | |
| Financial Instruments | Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 24, 2016 and September 26, 2015 (in millions): 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 8,601 $ — $ — $ 8,601 $ 8,601 $ — $ — Level 1: Money market funds 3,666 — — 3,666 3,666 — — Mutual funds 1,407 — (146 ) 1,261 — 1,261 — Subtotal 5,073 — (146 ) 4,927 3,666 1,261 — Level 2: U.S. Treasury securities 41,697 319 (4 ) 42,012 1,527 13,492 26,993 U.S. agency securities 7,543 16 — 7,559 2,762 2,441 2,356 Non-U.S. government securities 7,609 259 (27 ) 7,841 110 818 6,913 Certificates of deposit and time deposits 6,598 — — 6,598 1,108 3,897 1,593 Commercial paper 7,433 — — 7,433 2,468 4,965 — Corporate securities 131,166 1,409 (206 ) 132,369 242 19,599 112,528 Municipal securities 956 5 — 961 — 167 794 Mortgage- and asset-backed securities 19,134 178 (28 ) 19,284 — 31 19,253 Subtotal 222,136 2,186 (265 ) 224,057 8,217 45,410 170,430 Total $ 235,810 $ 2,186 $ (411 ) $ 237,585 $ 20,484 $ 46,671 $ 170,430 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 11,389 $ — $ — $ 11,389 $ 11,389 $ — $ — Level 1: Money market funds 1,798 — — 1,798 1,798 — — Mutual funds 1,772 — (144 ) 1,628 — 1,628 — Subtotal 3,570 — (144 ) 3,426 1,798 1,628 — Level 2: U.S. Treasury securities 34,902 181 (1 ) 35,082 — 3,498 31,584 U.S. agency securities 5,864 14 — 5,878 841 767 4,270 Non-U.S. government securities 6,356 45 (167 ) 6,234 43 135 6,056 Certificates of deposit and time deposits 4,347 — — 4,347 2,065 1,405 877 Commercial paper 6,016 — — 6,016 4,981 1,035 — Corporate securities 116,908 242 (985 ) 116,165 3 11,948 104,214 Municipal securities 947 5 — 952 — 48 904 Mortgage- and asset-backed securities 16,121 87 (31 ) 16,177 — 17 16,160 Subtotal 191,461 574 (1,184 ) 190,851 7,933 18,853 164,065 Total $ 206,420 $ 574 $ (1,328 ) $ 205,666 $ 21,120 $ 20,481 $ 164,065 The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and duration management. The maturities of the Company’s long-term marketable securities generally range from one to five years . The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of September 24, 2016 , the Company does not consider any of its investments to be other-than-temporarily impaired. Derivative Financial Instruments The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, on net investments in certain foreign subsidiaries and on certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. To help protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar and who sell in local currencies may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges. The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months . To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency-denominated debt, as economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges. The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities denominated in non-functional currencies. The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments. The Company designates these instruments as either cash flow or fair value hedges. The Company’s hedged interest rate transactions as of September 24, 2016 are expected to be recognized within 10 years . Cash Flow Hedges The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other income/(expense), net. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions. Net Investment Hedges The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net. Fair Value Hedges Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item. Non-Designated Derivatives Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The following tables show the Company’s derivative instruments at gross fair value as of September 24, 2016 and September 26, 2015 (in millions): 2016 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 518 $ 153 $ 671 Interest rate contracts $ 728 $ — $ 728 Derivative liabilities (2) : Foreign exchange contracts $ 935 $ 134 $ 1,069 Interest rate contracts $ 7 $ — $ 7 2015 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 1,442 $ 109 $ 1,551 Interest rate contracts $ 394 $ — $ 394 Derivative liabilities (2) : Foreign exchange contracts $ 905 $ 94 $ 999 Interest rate contracts $ 13 $ — $ 13 (1) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Consolidated Balance Sheets. (2) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated Balance Sheets. The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Gains/(Losses) recognized in OCI – effective portion: Cash flow hedges: Foreign exchange contracts $ 109 $ 3,592 $ 1,750 Interest rate contracts (57 ) (111 ) (15 ) Total $ 52 $ 3,481 $ 1,735 Net investment hedges: Foreign exchange contracts $ — $ 167 $ 53 Foreign currency debt (258 ) (71 ) — Total $ (258 ) $ 96 $ 53 Gains/(Losses) reclassified from AOCI into net income – effective portion: Cash flow hedges: Foreign exchange contracts $ 885 $ 4,092 $ (154 ) Interest rate contracts (11 ) (17 ) (16 ) Total $ 874 $ 4,075 $ (170 ) Gains/(Losses) on derivative instruments: Fair value hedges: Interest rate contracts $ 341 $ 337 $ 39 Gains/(Losses) related to hedged items: Fair value hedges: Interest rate contracts $ (341 ) $ (337 ) $ (39 ) The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Notional Amount Credit Risk Amount Notional Amount Credit Risk Amount Instruments designated as accounting hedges: Foreign exchange contracts $ 44,678 $ 518 $ 70,054 $ 1,385 Interest rate contracts $ 24,500 $ 728 $ 18,750 $ 394 Instruments not designated as accounting hedges: Foreign exchange contracts $ 54,305 $ 153 $ 49,190 $ 109 The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency or interest rates at each respective date. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change. Although the table above reflects the notional and credit risk amounts of the Company’s derivative instruments, it does not reflect the gains or losses associated with the exposures and transactions that the instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments. The Company generally enters into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. The Company presents its derivative assets and derivative liabilities at their gross fair values in its Consolidated Balance Sheets. The net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $163 million as of September 24, 2016 and $1.0 billion as of September 26, 2015 , which were recorded as accrued expenses in the Consolidated Balance Sheets. Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other. As of September 24, 2016 and September 26, 2015 , the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $1.5 billion and $2.2 billion , respectively, resulting in a net derivative asset of $160 million and a net derivative liability of $78 million , respectively. Accounts Receivable Trade Receivables The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, value-added resellers, small and mid-sized businesses and education, enterprise and government customers. The Company generally does not require collateral from its customers; however, the Company will require collateral in certain instances to limit credit risk. In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure. These credit-financing arrangements are directly between the third-party financing company and the end customer. As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements. As of September 24, 2016 and September 26, 2015 , the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10% and 12% , respectively. The Company’s cellular network carriers accounted for 63% and 71% of trade receivables as of September 24, 2016 and September 26, 2015 , respectively. Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture sub-assemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. Vendor non-trade receivables from two of the Company’s vendors accounted for 47% and 21% of total vendor non-trade receivables as of September 24, 2016 and three of the Company’s vendors accounted for 38% , 18% and 14% of total vendor non-trade receivables as of September 26, 2015 . |
Consolidated Financial Statemen
| Consolidated Financial Statement Details | 12 Months Ended |
| Sep. 24, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Consolidated Financial Statement Details | Consolidated Financial Statement Details The following tables show the Company’s consolidated financial statement details as of September 24, 2016 and September 26, 2015 (in millions): Property, Plant and Equipment, Net 2016 2015 Land and buildings $ 10,185 $ 6,956 Machinery, equipment and internal-use software 44,543 37,038 Leasehold improvements 6,517 5,263 Gross property, plant and equipment 61,245 49,257 Accumulated depreciation and amortization (34,235 ) (26,786 ) Total property, plant and equipment, net $ 27,010 $ 22,471 Other Non-Current Liabilities 2016 2015 Deferred tax liabilities $ 26,019 $ 24,062 Other non-current liabilities 10,055 9,365 Total other non-current liabilities $ 36,074 $ 33,427 Other Income/(Expense), Net The following table shows the detail of other income/(expense), net for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Interest and dividend income $ 3,999 $ 2,921 $ 1,795 Interest expense (1,456 ) (733 ) (384 ) Other expense, net (1,195 ) (903 ) (431 ) Total other income/(expense), net $ 1,348 $ 1,285 $ 980 |
Acquired Intangible Assets
| Acquired Intangible Assets | 12 Months Ended |
| Sep. 24, 2016 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Acquired Intangible Assets | Acquired Intangible Assets The Company’s acquired intangible assets with definite useful lives primarily consist of patents and licenses. The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived and amortizable acquired intangible assets $ 8,912 $ (5,806 ) $ 3,106 $ 8,125 $ (4,332 ) $ 3,793 Indefinite-lived and non-amortizable acquired intangible assets 100 — 100 100 — 100 Total acquired intangible assets $ 9,012 $ (5,806 ) $ 3,206 $ 8,225 $ (4,332 ) $ 3,893 Amortization expense related to acquired intangible assets was $1.5 billion , $1.3 billion and $1.1 billion in 2016 , 2015 and 2014 , respectively. As of September 24, 2016 , the remaining weighted-average amortization period for acquired intangible assets is 3.4 years . The expected annual amortization expense related to acquired intangible assets as of September 24, 2016 , is as follows (in millions): 2017 $ 1,197 2018 902 2019 449 2020 255 2021 175 Thereafter 128 Total $ 3,106 |
Income Taxes
| Income Taxes | 12 Months Ended |
| Sep. 24, 2016 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The provision for income taxes for 2016 , 2015 and 2014 , consisted of the following (in millions): 2016 2015 2014 Federal: Current $ 7,652 $ 11,730 $ 8,624 Deferred 5,043 3,408 3,183 12,695 15,138 11,807 State: Current 990 1,265 855 Deferred (138 ) (220 ) (178 ) 852 1,045 677 Foreign: Current 2,105 4,744 2,147 Deferred 33 (1,806 ) (658 ) 2,138 2,938 1,489 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 The foreign provision for income taxes is based on foreign pre-tax earnings of $41.1 billion , $47.6 billion and $33.6 billion in 2016, 2015 and 2014, respectively. The Company’s consolidated financial statements provide for any related tax liability on undistributed earnings that the Company does not intend to be indefinitely reinvested outside the U.S. Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5% . As of September 24, 2016 , U.S. income taxes have not been provided on a cumulative total of $109.8 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $35.9 billion . As of September 24, 2016 and September 26, 2015 , $216.0 billion and $186.9 billion , respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S. A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate ( 35% in 2016 , 2015 and 2014 ) to income before provision for income taxes for 2016 , 2015 and 2014 , is as follows (dollars in millions): 2016 2015 2014 Computed expected tax $ 21,480 $ 25,380 $ 18,719 State taxes, net of federal effect 553 680 469 Indefinitely invested earnings of foreign subsidiaries (5,582 ) (6,470 ) (4,744 ) Domestic production activities deduction (382 ) (426 ) (495 ) Research and development credit, net (371 ) (171 ) (88 ) Other (13 ) 128 112 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 Effective tax rate 25.6 % 26.4 % 26.1 % The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For RSUs, the Company receives an income tax benefit upon the award’s vesting equal to the tax effect of the underlying stock’s fair market value. The Company had net excess tax benefits from equity awards of $379 million , $748 million and $706 million in 2016 , 2015 and 2014 , respectively, which were reflected as increases to common stock. As of September 24, 2016 and September 26, 2015 , the significant components of the Company’s deferred tax assets and liabilities were (in millions): 2016 2015 Deferred tax assets: Accrued liabilities and other reserves $ 4,135 $ 4,205 Basis of capital assets 2,107 2,238 Deferred revenue 1,717 1,941 Deferred cost sharing 667 667 Share-based compensation 601 575 Unrealized losses — 564 Other 788 721 Total deferred tax assets, net of valuation allowance of $0 10,015 10,911 Deferred tax liabilities: Unremitted earnings of foreign subsidiaries 31,436 26,868 Other 485 303 Total deferred tax liabilities 31,921 27,171 Net deferred tax liabilities $ (21,906 ) $ (16,260 ) Deferred tax assets and liabilities reflect the effects of tax losses, credits and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Uncertain Tax Positions Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets. As of September 24, 2016 , the total amount of gross unrecognized tax benefits was $7.7 billion , of which $2.8 billion , if recognized, would affect the Company’s effective tax rate. As of September 26, 2015 , the total amount of gross unrecognized tax benefits was $6.9 billion , of which $2.5 billion , if recognized, would affect the Company’s effective tax rate. The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2016 , 2015 and 2014 , is as follows (in millions): 2016 2015 2014 Beginning Balance $ 6,900 $ 4,033 $ 2,714 Increases related to tax positions taken during a prior year 1,121 2,056 1,295 Decreases related to tax positions taken during a prior year (257 ) (345 ) (280 ) Increases related to tax positions taken during the current year 1,578 1,278 882 Decreases related to settlements with taxing authorities (1,618 ) (109 ) (574 ) Decreases related to expiration of statute of limitations — (13 ) (4 ) Ending Balance $ 7,724 $ 6,900 $ 4,033 The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of September 24, 2016 and September 26, 2015 , the total amount of gross interest and penalties accrued was $1.0 billion and $1.3 billion , respectively, which is classified as non-current liabilities in the Consolidated Balance Sheets. In connection with tax matters, the Company recognized interest and penalty expense in 2016 , 2015 and 2014 of $295 million , $709 million and $40 million , respectively. The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. During the fourth quarter of 2016, the Company reached a partial settlement with the U.S. Internal Revenue Service (the “IRS”) on its examination of the years 2010 through 2012. In connection with this settlement, the Company recognized a tax benefit in the fourth quarter of 2016 that was not significant to its consolidated financial statements. All years prior to 2013 are closed, except for the years 2010 through 2012 relating to R&D tax credits. In addition, the Company is subject to audits by state, local and foreign tax authorities. In major states and major foreign jurisdictions, the years subsequent to 2003 generally remain open and could be subject to examination by the taxing authorities. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of the resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease (whether by payment, release or a combination of both) in the next 12 months by up to $850 million . On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the "State Aid Decision"). The State Aid Decision orders Ireland to calculate and recover additional taxes from the Company for the period June 2003 through September 2014. Irish legislative changes, effective as of the beginning of 2015, eliminated the application of the tax opinions from that date forward. The Company believes the State Aid Decision to be without merit and intends to appeal to the General Court of the Court of Justice of the European Union. Ireland has also announced its intention to appeal the State Aid Decision. While the European Commission announced a recovery amount of up to €13 billion , plus interest, the actual amount of additional taxes subject to recovery is to be calculated by Ireland in accordance with the European Commission's guidance. Once the recovery amount is computed by Ireland, the Company anticipates funding it, including interest, out of foreign cash into escrow, pending conclusion of all appeals. The Company believes that any incremental Irish corporate income taxes potentially due would be creditable against U.S. taxes. |
Debt
| Debt | 12 Months Ended |
| Sep. 24, 2016 | |
| Debt Disclosure [Abstract] | |
| Debt | Debt Commercial Paper The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of September 24, 2016 and September 26, 2015 , the Company had $8.1 billion and $8.5 billion of Commercial Paper outstanding, respectively, with maturities generally less than nine months . The weighted-average interest rate of the Company’s Commercial Paper was 0.45% as of September 24, 2016 and 0.14% as of September 26, 2015 . The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2016 and 2015 (in millions): 2016 2015 Maturities less than 90 days: Proceeds from (repayments of) commercial paper, net $ (869 ) $ 5,293 Maturities greater than 90 days: Proceeds from commercial paper 3,632 3,851 Repayments of commercial paper (3,160 ) (6,953 ) Maturities greater than 90 days, net 472 (3,102 ) Total change in commercial paper, net $ (397 ) $ 2,191 Long-Term Debt As of September 24, 2016 , the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $78.4 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar-denominated and Australian dollar-denominated floating-rate notes, semi-annually for the U.S. dollar-denominated, Australian dollar-denominated, British pound-denominated and Japanese yen-denominated fixed-rate notes and annually for the euro-denominated and Swiss franc-denominated fixed-rate notes. The following table provides a summary of the Company’s term debt as of September 24, 2016 and September 26, 2015 : Maturities 2016 2015 Amount (in millions) Effective Interest Rate Amount (in millions) Effective Interest Rate 2013 debt issuance of $17.0 billion: Floating-rate notes 2018 $ 2,000 1.10% $ 3,000 0.51% - 1.10% Fixed-rate 1.000% - 3.850% notes 2018 - 2043 12,500 1.08% - 3.91% 14,000 0.51% - 3.91% 2014 debt issuance of $12.0 billion: Floating-rate notes 2017 - 2019 2,000 0.86% - 1.09% 2,000 0.37% - 0.60% Fixed-rate 1.050% - 4.450% notes 2017 - 2044 10,000 0.85% - 4.48% 10,000 0.37% - 4.48% 2015 debt issuances of $27.3 billion: Floating-rate notes 2017 - 2020 1,781 0.87% - 1.87% 1,743 0.36% - 1.87% Fixed-rate 0.350% - 4.375% notes 2017 - 2045 25,144 0.28% - 4.51% 24,958 0.28% - 4.51% Second quarter 2016 debt issuance of $15.5 billion: Floating-rate notes 2019 500 1.64 % — — Floating-rate notes 2021 500 1.95 % — — Fixed-rate 1.300% notes 2018 500 1.32 % — — Fixed-rate 1.700% notes 2019 1,000 1.71 % — — Fixed-rate 2.250% notes 2021 3,000 1.91 % — — Fixed-rate 2.850% notes 2023 1,500 2.58 % — — Fixed-rate 3.250% notes 2026 3,250 2.51 % — — Fixed-rate 4.500% notes 2036 1,250 4.54 % — — Fixed-rate 4.650% notes 2046 4,000 4.58 % — — Third quarter 2016 Australian dollar-denominated debt issuance of A$1.4 billion: Fixed-rate 2.650% notes 2020 493 1.92 % — — Fixed-rate 3.350% notes 2024 342 2.61 % — — Fixed-rate 3.600% notes 2026 247 2.84 % — — Third quarter 2016 debt issuance of $1.4 billion: Fixed-rate 4.150% notes 2046 1,377 4.15 % — — Fourth quarter 2016 debt issuance of $7.0 billion: Floating-rate notes 2019 350 0.91 % — — Fixed-rate 1.100% notes 2019 1,150 1.13 % — — Fixed-rate 1.550% notes 2021 1,250 1.40 % — — Fixed-rate 2.450% notes 2026 2,250 2.15 % — — Fixed-rate 3.850% notes 2046 2,000 3.86 % — — Total term debt 78,384 55,701 Unamortized premium/(discount) and issuance costs, net (174 ) (248 ) Hedge accounting fair value adjustments 717 376 Less: Current portion of long-term debt, net (3,500 ) (2,500 ) Total long-term debt $ 75,427 $ 53,329 To manage foreign currency risk associated with the Australian dollar-denominated notes issued in the third quarter of 2016, the Company entered into currency swaps with an aggregate notional amount of $1.0 billion , which effectively converted these notes to U.S. dollar-denominated notes. To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the second quarter of 2016 and maturing in 2021, 2023 and 2026, the Company entered into interest rate swaps with an aggregate notional amount of $5.0 billion . To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the fourth quarter of 2016 and maturing in 2021 and 2026, the Company entered into interest rate swaps with an aggregate notional amount of $1.8 billion . These interest rate swaps effectively converted a portion of the U.S. dollar-denominated fixed-rate notes to floating interest rate notes. As of September 24, 2016 , ¥195.5 billion of the Japanese yen-denominated notes was designated as a hedge of the foreign currency exposure of its net investment in a foreign operation. The foreign currency transaction gain or loss on the Japanese yen-denominated debt designated as a hedge is recorded in OCI as a part of the cumulative translation adjustment. As of September 24, 2016 , the carrying value of the debt designated as a net investment hedge was $1.9 billion . For further discussion regarding the Company’s use of derivative instruments see the Derivative Financial Instruments section of Note 2, “Financial Instruments.” The effective interest rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The Company recognized $1.4 billion , $722 million and $381 million of interest expense on its term debt for 2016 , 2015 and 2014 , respectively. The future principal payments for the Company’s Notes as of September 24, 2016 are as follows (in millions): 2017 $ 3,500 2018 6,500 2019 6,834 2020 6,454 2021 7,750 Thereafter 47,346 Total term debt $ 78,384 As of September 24, 2016 and September 26, 2015 , the fair value of the Company’s Notes, based on Level 2 inputs, was $81.7 billion and $54.9 billion , respectively. |
Shareholders' Equity
| Shareholders' Equity | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Shareholders' Equity | Shareholders’ Equity Dividends The Company declared and paid cash dividends per share during the periods presented as follows: Dividends Per Share Amount (in millions) 2016: Fourth quarter $ 0.57 $ 3,071 Third quarter 0.57 3,117 Second quarter 0.52 2,879 First quarter 0.52 2,898 Total cash dividends declared and paid $ 2.18 $ 11,965 2015: Fourth quarter $ 0.52 $ 2,950 Third quarter 0.52 2,997 Second quarter 0.47 2,734 First quarter 0.47 2,750 Total cash dividends declared and paid $ 1.98 $ 11,431 Future dividends are subject to declaration by the Board of Directors. Share Repurchase Program In April 2016, the Company’s Board of Directors increased the share repurchase authorization from $140 billion to $175 billion of the Company’s common stock, of which $133 billion had been utilized as of September 24, 2016 . The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has entered, and in the future may enter, into accelerated share repurchase arrangements (“ASRs”) with financial institutions. In exchange for up-front payments, the financial institutions deliver shares of the Company’s common stock during the purchase periods of each ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, is determined at the end of the applicable purchase period of each ASR based on the volume weighted-average price of the Company’s common stock during that period. The shares received are retired in the periods they are delivered, and the up-front payments are accounted for as a reduction to shareholders’ equity in the Company’s Consolidated Balance Sheets in the periods the payments are made. The Company reflects the ASRs as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as forward contracts indexed to its own common stock. The ASRs met all of the applicable criteria for equity classification, and therefore were not accounted for as derivative instruments. The following table shows the Company’s ASR activity and related information during the years ended September 24, 2016 and September 26, 2015 : Purchase Period End Date Number of Shares (in thousands) Average Repurchase Price Per Share ASR Amount (in millions) August 2016 ASR November 2016 22,468 (1) (1) $ 3,000 May 2016 ASR August 2016 60,452 (2) $ 99.25 $ 6,000 November 2015 ASR April 2016 29,122 $ 103.02 $ 3,000 May 2015 ASR July 2015 48,293 $ 124.24 $ 6,000 August 2014 ASR February 2015 81,525 $ 110.40 $ 9,000 January 2014 ASR December 2014 134,247 $ 89.39 $ 12,000 (1) “Number of Shares” represents those shares delivered in the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The August 2016 ASR purchase period will end in or before November 2016. (2) Includes 48.2 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2016, and 12.3 million shares delivered and retired at the end of the purchase period, which concluded in the fourth quarter of 2016. Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows: Number of Shares (in thousands) Average Repurchase Price Per Share Amount (in millions) 2016: Fourth quarter 28,579 $ 104.97 $ 3,000 Third quarter 41,238 $ 97.00 4,000 Second quarter 71,766 $ 97.54 7,000 First quarter 25,984 $ 115.45 3,000 Total open market common stock repurchases 167,567 $ 17,000 2015: Fourth quarter 121,802 $ 115.15 $ 14,026 Third quarter 31,231 $ 128.08 4,000 Second quarter 56,400 $ 124.11 7,000 First quarter 45,704 $ 109.40 5,000 Total open market common stock repurchases 255,137 $ 30,026 |
Comprehensive Income
| Comprehensive Income | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Comprehensive Income | Comprehensive Income Comprehensive income consists of two components, net income and OCI. OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges and unrealized gains and losses on marketable securities classified as available-for-sale. The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2016 and 2015 (in millions): Comprehensive Income Components Financial Statement Line Item 2016 2015 Unrealized (gains)/losses on derivative instruments: Foreign exchange contracts Revenue $ (865 ) $ (2,432 ) Cost of sales (130 ) (2,168 ) Other income/(expense), net 111 456 Interest rate contracts Other income/(expense), net 12 17 (872 ) (4,127 ) Unrealized (gains)/losses on marketable securities Other income/(expense), net 87 91 Total amounts reclassified from AOCI $ (785 ) $ (4,036 ) The following table shows the changes in AOCI by component for 2016 and 2015 (in millions): Cumulative Foreign Currency Translation Unrealized Gains/Losses on Derivative Instruments Unrealized Gains/Losses on Marketable Securities Total Balance at September 27, 2014 $ (242 ) $ 1,364 $ (40 ) $ 1,082 Other comprehensive income/(loss) before reclassifications (612 ) 3,346 (747 ) 1,987 Amounts reclassified from AOCI — (4,127 ) 91 (4,036 ) Tax effect 201 189 232 622 Other comprehensive income/(loss) (411 ) (592 ) (424 ) (1,427 ) Balance at September 26, 2015 (653 ) 772 (464 ) (345 ) Other comprehensive income/(loss) before reclassifications 67 14 2,445 2,526 Amounts reclassified from AOCI — (872 ) 87 (785 ) Tax effect 8 124 (894 ) (762 ) Other comprehensive income/(loss) 75 (734 ) 1,638 979 Balance at September 24, 2016 $ (578 ) $ 38 $ 1,174 $ 634 |
Benefit Plans
| Benefit Plans | 12 Months Ended |
| Sep. 24, 2016 | |
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
| Benefit Plans | Benefit Plans 2014 Employee Stock Plan In the second quarter of 2014, shareholders approved the 2014 Employee Stock Plan (the “2014 Plan”) and terminated the Company’s authority to grant new awards under the 2003 Employee Stock Plan (the “2003 Plan”). The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights, as well as cash bonus awards. RSUs granted under the 2014 Plan generally vest over four years , based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one -for-one basis. Each share issued with respect to RSUs granted under the 2014 Plan reduces the number of shares available for grant under the plan by two shares. RSUs cancelled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the 2014 Plan utilizing a factor of two times the number of RSUs cancelled or shares withheld. Currently, all RSUs granted under the 2014 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. Upon approval of the 2014 Plan, the Company reserved 385 million shares plus the number of shares remaining that were reserved but not issued under the 2003 Plan. Shares subject to outstanding awards under the 2003 Plan that expire, are cancelled or otherwise terminate, or are withheld to satisfy tax withholding obligations with respect to RSUs, will also be available for awards under the 2014 Plan. As of September 24, 2016 , approximately 386.4 million shares were reserved for future issuance under the 2014 Plan. 2003 Employee Stock Plan The 2003 Plan is a shareholder approved plan that provided for broad-based equity grants to employees, including executive officers. The 2003 Plan permitted the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation rights, stock purchase rights and performance-based awards. Options granted under the 2003 Plan generally expire seven to ten years after the grant date and generally become exercisable over a period of four years , based on continued employment, with either annual, semi-annual or quarterly vesting. RSUs granted under the 2003 Plan generally vest over two to four years , based on continued employment and are settled upon vesting in shares of the Company’s common stock on a one -for-one basis. All RSUs, other than RSUs held by the Chief Executive Officer, granted under the 2003 Plan have DERs. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. In the second quarter of 2014, the Company terminated the authority to grant new awards under the 2003 Plan. 1997 Director Stock Plan The 1997 Director Stock Plan (the “Director Plan”) is a shareholder approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-employee director joining the Board of Directors and automatic annual grants of RSUs at each annual meeting of shareholders, and (iii) permits the Board of Directors to prospectively change the relative mixture of stock options and RSUs for the initial and annual award grants and the methodology for determining the number of shares of the Company’s common stock subject to these grants without shareholder approval. Each share issued with respect to RSUs granted under the Director Plan reduces the number of shares available for grant under the plan by two shares. The Director Plan expires November 9, 2019 . All RSUs granted under the Director Plan are entitled to DERs. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. As of September 24, 2016 , approximately 1.1 million shares were reserved for future issuance under the Director Plan. Rule 10b5-1 Trading Plans During the three months ended September 24, 2016 , Section 16 officers Timothy D. Cook, Angela Ahrendts, Luca Maestri, Daniel Riccio, Philip Schiller and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s employee and director equity plans. Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six -month offering periods. An employee’s payroll deductions under the Purchase Plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year. As of September 24, 2016 , approximately 47.0 million shares were reserved for future issuance under the Purchase Plan. 401(k) Plan The Company’s 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ( $18,000 for calendar year 2016). The Company matches 50% to 100% of each employee’s contributions, depending on length of service, up to a maximum 6% of the employee’s eligible earnings. Restricted Stock Units A summary of the Company’s RSU activity and related information for 2016 , 2015 and 2014 , is as follows: Number of RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Aggregate Intrinsic Value (in millions) Balance at September 28, 2013 93,284 $ 62.24 RSUs granted 59,269 $ 74.54 RSUs vested (43,111 ) $ 57.29 RSUs cancelled (5,620 ) $ 68.47 Balance at September 27, 2014 103,822 $ 70.98 RSUs granted 45,587 $ 105.51 RSUs vested (41,684 ) $ 71.32 RSUs cancelled (6,258 ) $ 80.34 Balance at September 26, 2015 101,467 $ 85.77 RSUs granted 49,468 $ 109.28 RSUs vested (46,313 ) $ 84.44 RSUs cancelled (5,533 ) $ 96.48 Balance at September 24, 2016 99,089 $ 97.54 $ 11,168 The fair value as of the respective vesting dates of RSUs was $5.1 billion , $4.8 billion and $3.4 billion for 2016 , 2015 and 2014 , respectively. The majority of RSUs that vested in 2016 , 2015 and 2014 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 15.9 million , 14.1 million and 15.6 million for 2016 , 2015 and 2014 , respectively, and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to taxing authorities were $1.7 billion , $1.6 billion and $1.2 billion in 2016 , 2015 and 2014 , respectively, and are reflected as a financing activity within the Consolidated Statements of Cash Flows. These net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company. Share-based Compensation The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Cost of sales $ 769 $ 575 $ 450 Research and development 1,889 1,536 1,216 Selling, general and administrative 1,552 1,475 1,197 Total share-based compensation expense $ 4,210 $ 3,586 $ 2,863 The income tax benefit related to share-based compensation expense was $1.4 billion , $1.2 billion and $1.0 billion for 2016 , 2015 and 2014 , respectively. As of September 24, 2016 , the total unrecognized compensation cost related to outstanding stock options, RSUs and restricted stock was $7.5 billion , which the Company expects to recognize over a weighted-average period of 2.6 years . |
Commitments and Contingencies
| Commitments and Contingencies | 12 Months Ended |
| Sep. 24, 2016 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Accrued Warranty and Indemnification The following table shows changes in the Company’s accrued warranties and related costs for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Beginning accrued warranty and related costs $ 4,780 $ 4,159 $ 2,967 Cost of warranty claims (4,663 ) (4,401 ) (3,760 ) Accruals for product warranty 3,585 5,022 4,952 Ending accrued warranty and related costs $ 3,702 $ 4,780 $ 4,159 The Company generally does not indemnify end-users of its operating system and application software against legal claims that the software infringes third-party intellectual property rights. Other agreements entered into by the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights. The Company offers an iPhone Upgrade Program, which is available to customers who purchase a qualifying iPhone in the U.S., the U.K. and mainland China. The iPhone Upgrade Program provides customers the right to trade in that iPhone for a specified amount when purchasing a new iPhone, provided certain conditions are met. The Company accounts for the trade-in right as a guarantee liability and recognizes arrangement revenue net of the fair value of such right with subsequent changes to the guarantee liability recognized within revenue. The Company has entered into indemnification agreements with its directors and executive officers. Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers and to advance expenses incurred by such individuals in connection with related legal proceedings. It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim. However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations. Concentrations in the Available Sources of Supply of Materials and Product Although most components essential to the Company’s business are generally available from multiple sources, a number of components are currently obtained from single or limited sources. In addition, the Company competes for various components with other participants in the markets for mobile communication and media devices and personal computers. Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant pricing fluctuations that could materially adversely affect the Company’s financial condition and operating results. The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased. If the Company’s supply of components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the Company, the Company’s financial condition and operating results could be materially adversely affected. The Company’s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers concentrated on the production of common components instead of components customized to meet the Company’s requirements. The Company has entered into agreements for the supply of many components; however, there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all. Therefore, the Company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results. Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia. A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations. Certain of these outsourcing partners are the sole-sourced suppliers of components and manufacturers for many of the Company’s products. Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments. The Company’s manufacturing purchase obligations typically cover its requirements for periods up to 150 days . Other Off-Balance Sheet Commitments Operating Leases The Company leases various equipment and facilities, including retail space, under noncancelable operating lease arrangements. The Company does not currently utilize any other off-balance sheet financing arrangements. As of September 24, 2016 , the Company’s total future minimum lease payments under noncancelable operating leases were $7.6 billion . The Company's retail store and other facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options. Rent expense under all operating leases, including both cancelable and noncancelable leases, was $939 million , $794 million and $717 million in 2016 , 2015 and 2014 , respectively. Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 24, 2016 , are as follows (in millions): 2017 $ 929 2018 919 2019 915 2020 889 2021 836 Thereafter 3,139 Total $ 7,627 Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully adjudicated, as further discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors” and in Part I, Item 3 of this Form 10-K under the heading “Legal Proceedings.” In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of litigation is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected. Apple Inc. v. Samsung Electronics Co., Ltd., et al. On August 24, 2012, a jury returned a verdict awarding the Company $1.05 billion in its lawsuit against Samsung Electronics Co., Ltd. and affiliated parties in the United States District Court, Northern District of California, San Jose Division. On March 6, 2014, the District Court entered final judgment in favor of the Company in the amount of approximately $930 million . On May 18, 2015, the U.S. Court of Appeals for the Federal Circuit affirmed in part, and reversed in part, the decision of the District Court. As a result, the Court of Appeals ordered entry of final judgment on damages in the amount of approximately $548 million , with the District Court to determine supplemental damages and interest, as well as damages owed for products subject to the reversal in part. Samsung paid $548 million to the Company in December 2015, which was included in net sales in the Condensed Consolidated Statement of Operations. Because the case remains subject to further proceedings, the Company has not recognized any further amounts in its results of operations. On October 11, 2016, the United States Supreme Court heard arguments in Samsung’s request for appeal related to the $548 million in damages. |
Segment Information and Geograp
| Segment Information and Geographic Data | 12 Months Ended |
| Sep. 24, 2016 | |
| Segment Reporting [Abstract] | |
| Segment Information and Geographic Data | Segment Information and Geographic Data The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable operating segments. The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and those Asian countries not included in the Company’s other reportable operating segments. Although the reportable operating segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.” The Company evaluates the performance of its reportable operating segments based on net sales and operating income. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Advertising expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable operating segments. Costs excluded from segment operating income include various corporate expenses such as R&D, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes. The following table shows information by reportable operating segment for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Americas: Net sales $ 86,613 $ 93,864 $ 80,095 Operating income $ 28,172 $ 31,186 $ 26,158 Europe: Net sales $ 49,952 $ 50,337 $ 44,285 Operating income $ 15,348 $ 16,527 $ 14,434 Greater China: Net sales $ 48,492 $ 58,715 $ 31,853 Operating income $ 18,835 $ 23,002 $ 11,039 Japan: Net sales $ 16,928 $ 15,706 $ 15,314 Operating income $ 7,165 $ 7,617 $ 6,904 Rest of Asia Pacific: Net sales $ 13,654 $ 15,093 $ 11,248 Operating income $ 4,781 $ 5,518 $ 3,674 A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2016 , 2015 and 2014 is as follows (in millions): 2016 2015 2014 Segment operating income $ 74,301 $ 83,850 $ 62,209 Research and development expense (10,045 ) (8,067 ) (6,041 ) Other corporate expenses, net (4,232 ) (4,553 ) (3,665 ) Total operating income $ 60,024 $ 71,230 $ 52,503 The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2016, 2015 and 2014 . There was no single customer that accounted for more than 10% of net sales in 2016, 2015 or 2014 . Net sales for 2016 , 2015 and 2014 and long-lived assets as of September 24, 2016 and September 26, 2015 are as follows (in millions): 2016 2015 2014 Net sales: U.S. $ 75,667 $ 81,732 $ 68,909 China (1) 46,349 56,547 30,638 Other countries 93,623 95,436 83,248 Total net sales $ 215,639 $ 233,715 $ 182,795 2016 2015 Long-lived assets: U.S. $ 16,364 $ 12,022 China (1) 7,807 8,722 Other countries 2,839 3,040 Total long-lived assets $ 27,010 $ 23,784 (1) China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure. Net sales by product for 2016 , 2015 and 2014 are as follows (in millions): 2016 2015 2014 iPhone (1) $ 136,700 $ 155,041 $ 101,991 iPad (1) 20,628 23,227 30,283 Mac (1) 22,831 25,471 24,079 Services (2) 24,348 19,909 18,063 Other Products (1)(3) 11,132 10,067 8,379 Total net sales $ 215,639 $ 233,715 $ 182,795 (1) Includes deferrals and amortization of related software upgrade rights and non-software services. (2) Includes revenue from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, Apple Pay, licensing and other services. (3) Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories. |
Selected Quarterly Financial In
| Selected Quarterly Financial Information (Unaudited) | 12 Months Ended |
| Sep. 24, 2016 | |
| Quarterly Financial Information Disclosure [Abstract] | |
| Selected Quarterly Financial Information (Unaudited) | Selected Quarterly Financial Information (Unaudited) The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2016 and 2015 (in millions, except per share amounts): Fourth Quarter Third Quarter Second Quarter First Quarter 2016: Net sales $ 46,852 $ 42,358 $ 50,557 $ 75,872 Gross margin $ 17,813 $ 16,106 $ 19,921 $ 30,423 Net income $ 9,014 $ 7,796 $ 10,516 $ 18,361 Earnings per share (1) : Basic $ 1.68 $ 1.43 $ 1.91 $ 3.30 Diluted $ 1.67 $ 1.42 $ 1.90 $ 3.28 Fourth Quarter Third Quarter Second Quarter First Quarter 2015: Net sales $ 51,501 $ 49,605 $ 58,010 $ 74,599 Gross margin $ 20,548 $ 19,681 $ 23,656 $ 29,741 Net income $ 11,124 $ 10,677 $ 13,569 $ 18,024 Earnings per share (1) : Basic $ 1.97 $ 1.86 $ 2.34 $ 3.08 Diluted $ 1.96 $ 1.85 $ 2.33 $ 3.06 (1) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share. |
Summary of Significant Accoun21
| Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
| Sep. 24, 2016 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation and Preparation | Basis of Presentation and Preparation The accompanying consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period’s presentation. |
| Fiscal Period | The Company’s fiscal year is the 52 or 53 -week period that ends on the last Saturday of September. The Company’s fiscal years 2016 , 2015 and 2014 ended on September 24, 2016 , September 26, 2015 and September 27, 2014 , respectively, and each spanned 52 weeks. An additional week is included in the first fiscal quarter approximately every five or six years to realign fiscal quarters with calendar quarters, which will next occur in the first quarter of the Company's fiscal year ending September 30, 2017. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. |
| New Accounting Pronouncements | During 2016, the Company adopted an accounting standard that simplified the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The Company has adopted this accounting standard prospectively; accordingly, the prior period amounts in the Company’s Consolidated Balance Sheets within this Annual Report on Form 10-K were not adjusted to conform to the new accounting standard. The adoption of this accounting standard was not material to the Company’s consolidated financial statements. |
| Revenue Recognition | Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware. For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations. The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and iBooks Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. Revenue from AppleCare service and support contracts is deferred and recognized over the service coverage periods. AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty. The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Revenue Recognition for Arrangements with Multiple Deliverables For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. For multi-element arrangements accounted for in accordance with industry specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered. For sales of qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential to the functionality of the hardware device delivered at the time of sale. The second deliverable is the embedded right included with qualifying devices to receive on a when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. The third deliverable is the non-software services to be provided to qualifying devices. The Company allocates revenue between these deliverables using the relative selling price method. Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred. The Company’s process for determining its ESP for deliverables without VSOE or TPE considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, product specific business objectives, length of time a particular version of a device has been available, estimated cost to provide the non-software services and the relative ESP of the upgrade rights and non-software services as compared to the total selling price of the product. |
| Shipping Costs | Shipping Costs Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales. |
| Warranty Costs | Warranty Costs The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates. |
| Software Development Costs | Software Development Costs Research and development (“R&D”) costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred. |
| Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. |
| Share-based Compensation | Share-based Compensation The Company recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.” |
| Income Taxes | Income Taxes The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See Note 5, “Income Taxes” for additional information. |
| Earnings Per Share | Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share. Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased by employees under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. |
| Cash Equivalents and Marketable Securities | Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method. |
| Derivative Financial Instruments | Derivative Financial Instruments The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period. For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period. Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period. Derivative Financial Instruments The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, on net investments in certain foreign subsidiaries and on certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. To help protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar and who sell in local currencies may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges. The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months . To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency-denominated debt, as economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges. The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities denominated in non-functional currencies. The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments. The Company designates these instruments as either cash flow or fair value hedges. The Company’s hedged interest rate transactions as of September 24, 2016 are expected to be recognized within 10 years . Cash Flow Hedges The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other income/(expense), net. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions. Net Investment Hedges The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net. Fair Value Hedges Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item. Non-Designated Derivatives Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. |
| Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ abilities to pay. |
| Inventories | Inventories Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 24, 2016 and September 26, 2015 , the Company’s inventories consist primarily of finished goods. |
| Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one to five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease terms or useful life for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years . |
| Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets | Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2016 , 2015 and 2014 . For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2016 and 2015 , the Company’s goodwill was primarily allocated to the Americas and Europe reporting units. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years . |
| Fair Value Measurements | Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. |
| Foreign Currency Translation and Remeasurement | Foreign Currency Translation and Remeasurement The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates. |
Summary of Significant Accoun22
| Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Accounting Policies [Abstract] | |
| Computation of Basic and Diluted Earnings Per Share | The following table shows the computation of basic and diluted earnings per share for 2016 , 2015 and 2014 (net income in millions and shares in thousands): 2016 2015 2014 Numerator: Net income $ 45,687 $ 53,394 $ 39,510 Denominator: Weighted-average shares outstanding 5,470,820 5,753,421 6,085,572 Effect of dilutive securities 29,461 39,648 37,091 Weighted-average diluted shares 5,500,281 5,793,069 6,122,663 Basic earnings per share $ 8.35 $ 9.28 $ 6.49 Diluted earnings per share $ 8.31 $ 9.22 $ 6.45 |
Financial Instruments (Tables)
| Financial Instruments (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Investments, All Other Investments [Abstract] | |
| Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities | The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 24, 2016 and September 26, 2015 (in millions): 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 8,601 $ — $ — $ 8,601 $ 8,601 $ — $ — Level 1: Money market funds 3,666 — — 3,666 3,666 — — Mutual funds 1,407 — (146 ) 1,261 — 1,261 — Subtotal 5,073 — (146 ) 4,927 3,666 1,261 — Level 2: U.S. Treasury securities 41,697 319 (4 ) 42,012 1,527 13,492 26,993 U.S. agency securities 7,543 16 — 7,559 2,762 2,441 2,356 Non-U.S. government securities 7,609 259 (27 ) 7,841 110 818 6,913 Certificates of deposit and time deposits 6,598 — — 6,598 1,108 3,897 1,593 Commercial paper 7,433 — — 7,433 2,468 4,965 — Corporate securities 131,166 1,409 (206 ) 132,369 242 19,599 112,528 Municipal securities 956 5 — 961 — 167 794 Mortgage- and asset-backed securities 19,134 178 (28 ) 19,284 — 31 19,253 Subtotal 222,136 2,186 (265 ) 224,057 8,217 45,410 170,430 Total $ 235,810 $ 2,186 $ (411 ) $ 237,585 $ 20,484 $ 46,671 $ 170,430 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 11,389 $ — $ — $ 11,389 $ 11,389 $ — $ — Level 1: Money market funds 1,798 — — 1,798 1,798 — — Mutual funds 1,772 — (144 ) 1,628 — 1,628 — Subtotal 3,570 — (144 ) 3,426 1,798 1,628 — Level 2: U.S. Treasury securities 34,902 181 (1 ) 35,082 — 3,498 31,584 U.S. agency securities 5,864 14 — 5,878 841 767 4,270 Non-U.S. government securities 6,356 45 (167 ) 6,234 43 135 6,056 Certificates of deposit and time deposits 4,347 — — 4,347 2,065 1,405 877 Commercial paper 6,016 — — 6,016 4,981 1,035 — Corporate securities 116,908 242 (985 ) 116,165 3 11,948 104,214 Municipal securities 947 5 — 952 — 48 904 Mortgage- and asset-backed securities 16,121 87 (31 ) 16,177 — 17 16,160 Subtotal 191,461 574 (1,184 ) 190,851 7,933 18,853 164,065 Total $ 206,420 $ 574 $ (1,328 ) $ 205,666 $ 21,120 $ 20,481 $ 164,065 |
| Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities | The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 24, 2016 and September 26, 2015 (in millions): 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 8,601 $ — $ — $ 8,601 $ 8,601 $ — $ — Level 1: Money market funds 3,666 — — 3,666 3,666 — — Mutual funds 1,407 — (146 ) 1,261 — 1,261 — Subtotal 5,073 — (146 ) 4,927 3,666 1,261 — Level 2: U.S. Treasury securities 41,697 319 (4 ) 42,012 1,527 13,492 26,993 U.S. agency securities 7,543 16 — 7,559 2,762 2,441 2,356 Non-U.S. government securities 7,609 259 (27 ) 7,841 110 818 6,913 Certificates of deposit and time deposits 6,598 — — 6,598 1,108 3,897 1,593 Commercial paper 7,433 — — 7,433 2,468 4,965 — Corporate securities 131,166 1,409 (206 ) 132,369 242 19,599 112,528 Municipal securities 956 5 — 961 — 167 794 Mortgage- and asset-backed securities 19,134 178 (28 ) 19,284 — 31 19,253 Subtotal 222,136 2,186 (265 ) 224,057 8,217 45,410 170,430 Total $ 235,810 $ 2,186 $ (411 ) $ 237,585 $ 20,484 $ 46,671 $ 170,430 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 11,389 $ — $ — $ 11,389 $ 11,389 $ — $ — Level 1: Money market funds 1,798 — — 1,798 1,798 — — Mutual funds 1,772 — (144 ) 1,628 — 1,628 — Subtotal 3,570 — (144 ) 3,426 1,798 1,628 — Level 2: U.S. Treasury securities 34,902 181 (1 ) 35,082 — 3,498 31,584 U.S. agency securities 5,864 14 — 5,878 841 767 4,270 Non-U.S. government securities 6,356 45 (167 ) 6,234 43 135 6,056 Certificates of deposit and time deposits 4,347 — — 4,347 2,065 1,405 877 Commercial paper 6,016 — — 6,016 4,981 1,035 — Corporate securities 116,908 242 (985 ) 116,165 3 11,948 104,214 Municipal securities 947 5 — 952 — 48 904 Mortgage- and asset-backed securities 16,121 87 (31 ) 16,177 — 17 16,160 Subtotal 191,461 574 (1,184 ) 190,851 7,933 18,853 164,065 Total $ 206,420 $ 574 $ (1,328 ) $ 205,666 $ 21,120 $ 20,481 $ 164,065 |
| Derivative Instruments at Gross Fair Value | The following tables show the Company’s derivative instruments at gross fair value as of September 24, 2016 and September 26, 2015 (in millions): 2016 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 518 $ 153 $ 671 Interest rate contracts $ 728 $ — $ 728 Derivative liabilities (2) : Foreign exchange contracts $ 935 $ 134 $ 1,069 Interest rate contracts $ 7 $ — $ 7 2015 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 1,442 $ 109 $ 1,551 Interest rate contracts $ 394 $ — $ 394 Derivative liabilities (2) : Foreign exchange contracts $ 905 $ 94 $ 999 Interest rate contracts $ 13 $ — $ 13 (1) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Consolidated Balance Sheets. (2) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated Balance Sheets. |
| Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges | The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Gains/(Losses) recognized in OCI – effective portion: Cash flow hedges: Foreign exchange contracts $ 109 $ 3,592 $ 1,750 Interest rate contracts (57 ) (111 ) (15 ) Total $ 52 $ 3,481 $ 1,735 Net investment hedges: Foreign exchange contracts $ — $ 167 $ 53 Foreign currency debt (258 ) (71 ) — Total $ (258 ) $ 96 $ 53 Gains/(Losses) reclassified from AOCI into net income – effective portion: Cash flow hedges: Foreign exchange contracts $ 885 $ 4,092 $ (154 ) Interest rate contracts (11 ) (17 ) (16 ) Total $ 874 $ 4,075 $ (170 ) Gains/(Losses) on derivative instruments: Fair value hedges: Interest rate contracts $ 341 $ 337 $ 39 Gains/(Losses) related to hedged items: Fair value hedges: Interest rate contracts $ (341 ) $ (337 ) $ (39 ) |
| Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments | The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Notional Amount Credit Risk Amount Notional Amount Credit Risk Amount Instruments designated as accounting hedges: Foreign exchange contracts $ 44,678 $ 518 $ 70,054 $ 1,385 Interest rate contracts $ 24,500 $ 728 $ 18,750 $ 394 Instruments not designated as accounting hedges: Foreign exchange contracts $ 54,305 $ 153 $ 49,190 $ 109 |
Consolidated Financial Statem24
| Consolidated Financial Statement Details (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Property, Plant and Equipment, Net | Property, Plant and Equipment, Net 2016 2015 Land and buildings $ 10,185 $ 6,956 Machinery, equipment and internal-use software 44,543 37,038 Leasehold improvements 6,517 5,263 Gross property, plant and equipment 61,245 49,257 Accumulated depreciation and amortization (34,235 ) (26,786 ) Total property, plant and equipment, net $ 27,010 $ 22,471 |
| Other Non-Current Liabilities | Other Non-Current Liabilities 2016 2015 Deferred tax liabilities $ 26,019 $ 24,062 Other non-current liabilities 10,055 9,365 Total other non-current liabilities $ 36,074 $ 33,427 |
| Other Income/(Expense), Net | Other Income/(Expense), Net The following table shows the detail of other income/(expense), net for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Interest and dividend income $ 3,999 $ 2,921 $ 1,795 Interest expense (1,456 ) (733 ) (384 ) Other expense, net (1,195 ) (903 ) (431 ) Total other income/(expense), net $ 1,348 $ 1,285 $ 980 |
Acquired Intangible Assets (Tab
| Acquired Intangible Assets (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Components of Gross and Net Intangible Asset Balances | The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived and amortizable acquired intangible assets $ 8,912 $ (5,806 ) $ 3,106 $ 8,125 $ (4,332 ) $ 3,793 Indefinite-lived and non-amortizable acquired intangible assets 100 — 100 100 — 100 Total acquired intangible assets $ 9,012 $ (5,806 ) $ 3,206 $ 8,225 $ (4,332 ) $ 3,893 |
| Components of Gross and Net Intangible Asset Balances | The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived and amortizable acquired intangible assets $ 8,912 $ (5,806 ) $ 3,106 $ 8,125 $ (4,332 ) $ 3,793 Indefinite-lived and non-amortizable acquired intangible assets 100 — 100 100 — 100 Total acquired intangible assets $ 9,012 $ (5,806 ) $ 3,206 $ 8,225 $ (4,332 ) $ 3,893 |
| Expected Annual Amortization Expense Related to Acquired Intangible Assets | The expected annual amortization expense related to acquired intangible assets as of September 24, 2016 , is as follows (in millions): 2017 $ 1,197 2018 902 2019 449 2020 255 2021 175 Thereafter 128 Total $ 3,106 |
Income Taxes (Tables)
| Income Taxes (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Income Tax Disclosure [Abstract] | |
| Provision for Income Taxes | The provision for income taxes for 2016 , 2015 and 2014 , consisted of the following (in millions): 2016 2015 2014 Federal: Current $ 7,652 $ 11,730 $ 8,624 Deferred 5,043 3,408 3,183 12,695 15,138 11,807 State: Current 990 1,265 855 Deferred (138 ) (220 ) (178 ) 852 1,045 677 Foreign: Current 2,105 4,744 2,147 Deferred 33 (1,806 ) (658 ) 2,138 2,938 1,489 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 |
| Reconciliation of Provision for Income Taxes | A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate ( 35% in 2016 , 2015 and 2014 ) to income before provision for income taxes for 2016 , 2015 and 2014 , is as follows (dollars in millions): 2016 2015 2014 Computed expected tax $ 21,480 $ 25,380 $ 18,719 State taxes, net of federal effect 553 680 469 Indefinitely invested earnings of foreign subsidiaries (5,582 ) (6,470 ) (4,744 ) Domestic production activities deduction (382 ) (426 ) (495 ) Research and development credit, net (371 ) (171 ) (88 ) Other (13 ) 128 112 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 Effective tax rate 25.6 % 26.4 % 26.1 % |
| Significant Components of Deferred Tax Assets and Liabilities | As of September 24, 2016 and September 26, 2015 , the significant components of the Company’s deferred tax assets and liabilities were (in millions): 2016 2015 Deferred tax assets: Accrued liabilities and other reserves $ 4,135 $ 4,205 Basis of capital assets 2,107 2,238 Deferred revenue 1,717 1,941 Deferred cost sharing 667 667 Share-based compensation 601 575 Unrealized losses — 564 Other 788 721 Total deferred tax assets, net of valuation allowance of $0 10,015 10,911 Deferred tax liabilities: Unremitted earnings of foreign subsidiaries 31,436 26,868 Other 485 303 Total deferred tax liabilities 31,921 27,171 Net deferred tax liabilities $ (21,906 ) $ (16,260 ) |
| Aggregate Changes in Gross Unrecognized Tax Benefits Excluding Interest and Penalties | The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2016 , 2015 and 2014 , is as follows (in millions): 2016 2015 2014 Beginning Balance $ 6,900 $ 4,033 $ 2,714 Increases related to tax positions taken during a prior year 1,121 2,056 1,295 Decreases related to tax positions taken during a prior year (257 ) (345 ) (280 ) Increases related to tax positions taken during the current year 1,578 1,278 882 Decreases related to settlements with taxing authorities (1,618 ) (109 ) (574 ) Decreases related to expiration of statute of limitations — (13 ) (4 ) Ending Balance $ 7,724 $ 6,900 $ 4,033 |
Debt (Tables)
| Debt (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Debt Disclosure [Abstract] | |
| Summary of Cash Flows Associated With Issuance and Maturities of Commercial Paper | The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2016 and 2015 (in millions): 2016 2015 Maturities less than 90 days: Proceeds from (repayments of) commercial paper, net $ (869 ) $ 5,293 Maturities greater than 90 days: Proceeds from commercial paper 3,632 3,851 Repayments of commercial paper (3,160 ) (6,953 ) Maturities greater than 90 days, net 472 (3,102 ) Total change in commercial paper, net $ (397 ) $ 2,191 |
| Summary of Term Debt | The following table provides a summary of the Company’s term debt as of September 24, 2016 and September 26, 2015 : Maturities 2016 2015 Amount (in millions) Effective Interest Rate Amount (in millions) Effective Interest Rate 2013 debt issuance of $17.0 billion: Floating-rate notes 2018 $ 2,000 1.10% $ 3,000 0.51% - 1.10% Fixed-rate 1.000% - 3.850% notes 2018 - 2043 12,500 1.08% - 3.91% 14,000 0.51% - 3.91% 2014 debt issuance of $12.0 billion: Floating-rate notes 2017 - 2019 2,000 0.86% - 1.09% 2,000 0.37% - 0.60% Fixed-rate 1.050% - 4.450% notes 2017 - 2044 10,000 0.85% - 4.48% 10,000 0.37% - 4.48% 2015 debt issuances of $27.3 billion: Floating-rate notes 2017 - 2020 1,781 0.87% - 1.87% 1,743 0.36% - 1.87% Fixed-rate 0.350% - 4.375% notes 2017 - 2045 25,144 0.28% - 4.51% 24,958 0.28% - 4.51% Second quarter 2016 debt issuance of $15.5 billion: Floating-rate notes 2019 500 1.64 % — — Floating-rate notes 2021 500 1.95 % — — Fixed-rate 1.300% notes 2018 500 1.32 % — — Fixed-rate 1.700% notes 2019 1,000 1.71 % — — Fixed-rate 2.250% notes 2021 3,000 1.91 % — — Fixed-rate 2.850% notes 2023 1,500 2.58 % — — Fixed-rate 3.250% notes 2026 3,250 2.51 % — — Fixed-rate 4.500% notes 2036 1,250 4.54 % — — Fixed-rate 4.650% notes 2046 4,000 4.58 % — — Third quarter 2016 Australian dollar-denominated debt issuance of A$1.4 billion: Fixed-rate 2.650% notes 2020 493 1.92 % — — Fixed-rate 3.350% notes 2024 342 2.61 % — — Fixed-rate 3.600% notes 2026 247 2.84 % — — Third quarter 2016 debt issuance of $1.4 billion: Fixed-rate 4.150% notes 2046 1,377 4.15 % — — Fourth quarter 2016 debt issuance of $7.0 billion: Floating-rate notes 2019 350 0.91 % — — Fixed-rate 1.100% notes 2019 1,150 1.13 % — — Fixed-rate 1.550% notes 2021 1,250 1.40 % — — Fixed-rate 2.450% notes 2026 2,250 2.15 % — — Fixed-rate 3.850% notes 2046 2,000 3.86 % — — Total term debt 78,384 55,701 Unamortized premium/(discount) and issuance costs, net (174 ) (248 ) Hedge accounting fair value adjustments 717 376 Less: Current portion of long-term debt, net (3,500 ) (2,500 ) Total long-term debt $ 75,427 $ 53,329 |
| Future Principal Payments for Notes | The future principal payments for the Company’s Notes as of September 24, 2016 are as follows (in millions): 2017 $ 3,500 2018 6,500 2019 6,834 2020 6,454 2021 7,750 Thereafter 47,346 Total term debt $ 78,384 |
Shareholders' Equity (Tables)
| Shareholders' Equity (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Cash Dividends Declared and Paid Per Share | The Company declared and paid cash dividends per share during the periods presented as follows: Dividends Per Share Amount (in millions) 2016: Fourth quarter $ 0.57 $ 3,071 Third quarter 0.57 3,117 Second quarter 0.52 2,879 First quarter 0.52 2,898 Total cash dividends declared and paid $ 2.18 $ 11,965 2015: Fourth quarter $ 0.52 $ 2,950 Third quarter 0.52 2,997 Second quarter 0.47 2,734 First quarter 0.47 2,750 Total cash dividends declared and paid $ 1.98 $ 11,431 |
| Accelerated Share Repurchase Activity and Related Information | The following table shows the Company’s ASR activity and related information during the years ended September 24, 2016 and September 26, 2015 : Purchase Period End Date Number of Shares (in thousands) Average Repurchase Price Per Share ASR Amount (in millions) August 2016 ASR November 2016 22,468 (1) (1) $ 3,000 May 2016 ASR August 2016 60,452 (2) $ 99.25 $ 6,000 November 2015 ASR April 2016 29,122 $ 103.02 $ 3,000 May 2015 ASR July 2015 48,293 $ 124.24 $ 6,000 August 2014 ASR February 2015 81,525 $ 110.40 $ 9,000 January 2014 ASR December 2014 134,247 $ 89.39 $ 12,000 (1) “Number of Shares” represents those shares delivered in the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The August 2016 ASR purchase period will end in or before November 2016. (2) Includes 48.2 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2016, and 12.3 million shares delivered and retired at the end of the purchase period, which concluded in the fourth quarter of 2016. |
| Repurchases of Common Shares in Open Market | Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows: Number of Shares (in thousands) Average Repurchase Price Per Share Amount (in millions) 2016: Fourth quarter 28,579 $ 104.97 $ 3,000 Third quarter 41,238 $ 97.00 4,000 Second quarter 71,766 $ 97.54 7,000 First quarter 25,984 $ 115.45 3,000 Total open market common stock repurchases 167,567 $ 17,000 2015: Fourth quarter 121,802 $ 115.15 $ 14,026 Third quarter 31,231 $ 128.08 4,000 Second quarter 56,400 $ 124.11 7,000 First quarter 45,704 $ 109.40 5,000 Total open market common stock repurchases 255,137 $ 30,026 |
Comprehensive Income (Tables)
| Comprehensive Income (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Pre-tax Amounts Reclassified from AOCI into Consolidated Statements of Operations | The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2016 and 2015 (in millions): Comprehensive Income Components Financial Statement Line Item 2016 2015 Unrealized (gains)/losses on derivative instruments: Foreign exchange contracts Revenue $ (865 ) $ (2,432 ) Cost of sales (130 ) (2,168 ) Other income/(expense), net 111 456 Interest rate contracts Other income/(expense), net 12 17 (872 ) (4,127 ) Unrealized (gains)/losses on marketable securities Other income/(expense), net 87 91 Total amounts reclassified from AOCI $ (785 ) $ (4,036 ) |
| Change in Accumulated Other Comprehensive Income by Component | The following table shows the changes in AOCI by component for 2016 and 2015 (in millions): Cumulative Foreign Currency Translation Unrealized Gains/Losses on Derivative Instruments Unrealized Gains/Losses on Marketable Securities Total Balance at September 27, 2014 $ (242 ) $ 1,364 $ (40 ) $ 1,082 Other comprehensive income/(loss) before reclassifications (612 ) 3,346 (747 ) 1,987 Amounts reclassified from AOCI — (4,127 ) 91 (4,036 ) Tax effect 201 189 232 622 Other comprehensive income/(loss) (411 ) (592 ) (424 ) (1,427 ) Balance at September 26, 2015 (653 ) 772 (464 ) (345 ) Other comprehensive income/(loss) before reclassifications 67 14 2,445 2,526 Amounts reclassified from AOCI — (872 ) 87 (785 ) Tax effect 8 124 (894 ) (762 ) Other comprehensive income/(loss) 75 (734 ) 1,638 979 Balance at September 24, 2016 $ (578 ) $ 38 $ 1,174 $ 634 |
Benefit Plans (Tables)
| Benefit Plans (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
| Restricted Stock Activity | A summary of the Company’s RSU activity and related information for 2016 , 2015 and 2014 , is as follows: Number of RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Aggregate Intrinsic Value (in millions) Balance at September 28, 2013 93,284 $ 62.24 RSUs granted 59,269 $ 74.54 RSUs vested (43,111 ) $ 57.29 RSUs cancelled (5,620 ) $ 68.47 Balance at September 27, 2014 103,822 $ 70.98 RSUs granted 45,587 $ 105.51 RSUs vested (41,684 ) $ 71.32 RSUs cancelled (6,258 ) $ 80.34 Balance at September 26, 2015 101,467 $ 85.77 RSUs granted 49,468 $ 109.28 RSUs vested (46,313 ) $ 84.44 RSUs cancelled (5,533 ) $ 96.48 Balance at September 24, 2016 99,089 $ 97.54 $ 11,168 |
| Summary of Share-Based Compensation Expense | The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Cost of sales $ 769 $ 575 $ 450 Research and development 1,889 1,536 1,216 Selling, general and administrative 1,552 1,475 1,197 Total share-based compensation expense $ 4,210 $ 3,586 $ 2,863 |
Commitments and Contingencies (
| Commitments and Contingencies (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Changes in Accrued Warranties and Related Costs | The following table shows changes in the Company’s accrued warranties and related costs for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Beginning accrued warranty and related costs $ 4,780 $ 4,159 $ 2,967 Cost of warranty claims (4,663 ) (4,401 ) (3,760 ) Accruals for product warranty 3,585 5,022 4,952 Ending accrued warranty and related costs $ 3,702 $ 4,780 $ 4,159 |
| Future Minimum Lease Payments under Noncancelable Operating Leases | Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 24, 2016 , are as follows (in millions): 2017 $ 929 2018 919 2019 915 2020 889 2021 836 Thereafter 3,139 Total $ 7,627 |
Segment Information and Geogr32
| Segment Information and Geographic Data (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Segment Reporting [Abstract] | |
| Summary Information by Operating Segment | The following table shows information by reportable operating segment for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Americas: Net sales $ 86,613 $ 93,864 $ 80,095 Operating income $ 28,172 $ 31,186 $ 26,158 Europe: Net sales $ 49,952 $ 50,337 $ 44,285 Operating income $ 15,348 $ 16,527 $ 14,434 Greater China: Net sales $ 48,492 $ 58,715 $ 31,853 Operating income $ 18,835 $ 23,002 $ 11,039 Japan: Net sales $ 16,928 $ 15,706 $ 15,314 Operating income $ 7,165 $ 7,617 $ 6,904 Rest of Asia Pacific: Net sales $ 13,654 $ 15,093 $ 11,248 Operating income $ 4,781 $ 5,518 $ 3,674 |
| Reconciliation of Segment Operating Income to Consolidated Statements of Operations | A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2016 , 2015 and 2014 is as follows (in millions): 2016 2015 2014 Segment operating income $ 74,301 $ 83,850 $ 62,209 Research and development expense (10,045 ) (8,067 ) (6,041 ) Other corporate expenses, net (4,232 ) (4,553 ) (3,665 ) Total operating income $ 60,024 $ 71,230 $ 52,503 |
| Net Sales and Long-lived Assets | Net sales for 2016 , 2015 and 2014 and long-lived assets as of September 24, 2016 and September 26, 2015 are as follows (in millions): 2016 2015 2014 Net sales: U.S. $ 75,667 $ 81,732 $ 68,909 China (1) 46,349 56,547 30,638 Other countries 93,623 95,436 83,248 Total net sales $ 215,639 $ 233,715 $ 182,795 2016 2015 Long-lived assets: U.S. $ 16,364 $ 12,022 China (1) 7,807 8,722 Other countries 2,839 3,040 Total long-lived assets $ 27,010 $ 23,784 (1) China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure. |
| Net Sales by Product | Net sales by product for 2016 , 2015 and 2014 are as follows (in millions): 2016 2015 2014 iPhone (1) $ 136,700 $ 155,041 $ 101,991 iPad (1) 20,628 23,227 30,283 Mac (1) 22,831 25,471 24,079 Services (2) 24,348 19,909 18,063 Other Products (1)(3) 11,132 10,067 8,379 Total net sales $ 215,639 $ 233,715 $ 182,795 (1) Includes deferrals and amortization of related software upgrade rights and non-software services. (2) Includes revenue from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, Apple Pay, licensing and other services. (3) Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories. |
Selected Quarterly Financial 33
| Selected Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Quarterly Financial Information Disclosure [Abstract] | |
| Summary of Quarterly Financial Information | The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2016 and 2015 (in millions, except per share amounts): Fourth Quarter Third Quarter Second Quarter First Quarter 2016: Net sales $ 46,852 $ 42,358 $ 50,557 $ 75,872 Gross margin $ 17,813 $ 16,106 $ 19,921 $ 30,423 Net income $ 9,014 $ 7,796 $ 10,516 $ 18,361 Earnings per share (1) : Basic $ 1.68 $ 1.43 $ 1.91 $ 3.30 Diluted $ 1.67 $ 1.42 $ 1.90 $ 3.28 Fourth Quarter Third Quarter Second Quarter First Quarter 2015: Net sales $ 51,501 $ 49,605 $ 58,010 $ 74,599 Gross margin $ 20,548 $ 19,681 $ 23,656 $ 29,741 Net income $ 11,124 $ 10,677 $ 13,569 $ 18,024 Earnings per share (1) : Basic $ 1.97 $ 1.86 $ 2.34 $ 3.08 Diluted $ 1.96 $ 1.85 $ 2.33 $ 3.06 (1) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share. |
Summary of Significant Accoun34
| Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
| Sep. 24, 2016USD ($)Item | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | |
| Significant Accounting Policies [Line Items] | |||
| Deliverable in arrangements | Item | 3 | ||
| Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage | 50.00% | 50.00% | |
| Depreciation and amortization expense | $ 8,300,000,000 | $ 9,200,000,000 | $ 6,900,000,000 |
| Goodwill impairment charges | 0 | 0 | 0 |
| Indefinite lived intangible asset impairment charges | $ 0 | $ 0 | $ 0 |
| Minimum | |||
| Significant Accounting Policies [Line Items] | |||
| Amortized acquired intangible assets with definite lives useful period (in years) | 3 years | ||
| Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Amortized acquired intangible assets with definite lives useful period (in years) | 7 years | ||
| Building | Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 30 years | ||
| Machinery and Equipment | Minimum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 1 year | ||
| Machinery and Equipment | Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 5 years | ||
| Internal-Use Software | Minimum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 3 years | ||
| Internal-Use Software | Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 5 years |
Summary of Significant Accoun35
| Summary of Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Numerator: | |||||||||||
| Net income | $ 9,014 | $ 7,796 | $ 10,516 | $ 18,361 | $ 11,124 | $ 10,677 | $ 13,569 | $ 18,024 | $ 45,687 | $ 53,394 | $ 39,510 |
| Denominator: | |||||||||||
| Weighted-average shares outstanding (in shares) | 5,470,820 | 5,753,421 | 6,085,572 | ||||||||
| Effect of dilutive securities (in shares) | 29,461 | 39,648 | 37,091 | ||||||||
| Weighted-average diluted shares (in shares) | 5,500,281 | 5,793,069 | 6,122,663 | ||||||||
| Basic earnings per share (in dollars per share) | $ 1.68 | $ 1.43 | $ 1.91 | $ 3.30 | $ 1.97 | $ 1.86 | $ 2.34 | $ 3.08 | $ 8.35 | $ 9.28 | $ 6.49 |
| Diluted earnings per share (in dollars per share) | $ 1.67 | $ 1.42 | $ 1.90 | $ 3.28 | $ 1.96 | $ 1.85 | $ 2.33 | $ 3.06 | $ 8.31 | $ 9.22 | $ 6.45 |
Financial Instruments - Cash an
| Financial Instruments - Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 |
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | $ 235,810 | $ 206,420 | ||
| Unrealized Gains | 2,186 | 574 | ||
| Unrealized Losses | (411) | (1,328) | ||
| Fair Value | 237,585 | 205,666 | ||
| Cash and cash equivalents | 20,484 | 21,120 | $ 13,844 | $ 14,259 |
| Short-term marketable securities | 46,671 | 20,481 | ||
| Long-term marketable securities | 170,430 | 164,065 | ||
| Cash | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 8,601 | 11,389 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 8,601 | 11,389 | ||
| Cash and cash equivalents | 8,601 | 11,389 | ||
| Short-term marketable securities | 0 | 0 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 1 | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 5,073 | 3,570 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | (146) | (144) | ||
| Fair Value | 4,927 | 3,426 | ||
| Cash and cash equivalents | 3,666 | 1,798 | ||
| Short-term marketable securities | 1,261 | 1,628 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 1 | Money market funds | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 3,666 | 1,798 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 3,666 | 1,798 | ||
| Cash and cash equivalents | 3,666 | 1,798 | ||
| Short-term marketable securities | 0 | 0 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 1 | Mutual funds | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 1,407 | 1,772 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | (146) | (144) | ||
| Fair Value | 1,261 | 1,628 | ||
| Cash and cash equivalents | 0 | 0 | ||
| Short-term marketable securities | 1,261 | 1,628 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 2 | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 222,136 | 191,461 | ||
| Unrealized Gains | 2,186 | 574 | ||
| Unrealized Losses | (265) | (1,184) | ||
| Fair Value | 224,057 | 190,851 | ||
| Cash and cash equivalents | 8,217 | 7,933 | ||
| Short-term marketable securities | 45,410 | 18,853 | ||
| Long-term marketable securities | 170,430 | 164,065 | ||
| Level 2 | U.S. Treasury securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 41,697 | 34,902 | ||
| Unrealized Gains | 319 | 181 | ||
| Unrealized Losses | (4) | (1) | ||
| Fair Value | 42,012 | 35,082 | ||
| Cash and cash equivalents | 1,527 | 0 | ||
| Short-term marketable securities | 13,492 | 3,498 | ||
| Long-term marketable securities | 26,993 | 31,584 | ||
| Level 2 | U.S. agency securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 7,543 | 5,864 | ||
| Unrealized Gains | 16 | 14 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 7,559 | 5,878 | ||
| Cash and cash equivalents | 2,762 | 841 | ||
| Short-term marketable securities | 2,441 | 767 | ||
| Long-term marketable securities | 2,356 | 4,270 | ||
| Level 2 | Non-U.S. government securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 7,609 | 6,356 | ||
| Unrealized Gains | 259 | 45 | ||
| Unrealized Losses | (27) | (167) | ||
| Fair Value | 7,841 | 6,234 | ||
| Cash and cash equivalents | 110 | 43 | ||
| Short-term marketable securities | 818 | 135 | ||
| Long-term marketable securities | 6,913 | 6,056 | ||
| Level 2 | Certificates of deposit and time deposits | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 6,598 | 4,347 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 6,598 | 4,347 | ||
| Cash and cash equivalents | 1,108 | 2,065 | ||
| Short-term marketable securities | 3,897 | 1,405 | ||
| Long-term marketable securities | 1,593 | 877 | ||
| Level 2 | Commercial paper | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 7,433 | 6,016 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 7,433 | 6,016 | ||
| Cash and cash equivalents | 2,468 | 4,981 | ||
| Short-term marketable securities | 4,965 | 1,035 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 2 | Corporate securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 131,166 | 116,908 | ||
| Unrealized Gains | 1,409 | 242 | ||
| Unrealized Losses | (206) | (985) | ||
| Fair Value | 132,369 | 116,165 | ||
| Cash and cash equivalents | 242 | 3 | ||
| Short-term marketable securities | 19,599 | 11,948 | ||
| Long-term marketable securities | 112,528 | 104,214 | ||
| Level 2 | Municipal securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 956 | 947 | ||
| Unrealized Gains | 5 | 5 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 961 | 952 | ||
| Cash and cash equivalents | 0 | 0 | ||
| Short-term marketable securities | 167 | 48 | ||
| Long-term marketable securities | 794 | 904 | ||
| Level 2 | Mortgage- and asset-backed securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 19,134 | 16,121 | ||
| Unrealized Gains | 178 | 87 | ||
| Unrealized Losses | (28) | (31) | ||
| Fair Value | 19,284 | 16,177 | ||
| Cash and cash equivalents | 0 | 0 | ||
| Short-term marketable securities | 31 | 17 | ||
| Long-term marketable securities | $ 19,253 | $ 16,160 |
Financial Instruments - Additio
| Financial Instruments - Additional Information (Detail) $ in Millions | 12 Months Ended | |
| Sep. 24, 2016USD ($)CustomerVendor | Sep. 26, 2015USD ($)CustomerVendor | |
| Financial Instruments [Line Items] | ||
| Maturities of long-term marketable securities, minimum | 1 year | |
| Maturities of long-term marketable securities, maximum | 5 years | |
| Hedged foreign currency transactions, typical term | 12 months | |
| Hedged interest rate transactions, expected period to be recognized | 10 years | |
| Reduction to derivative assets by rights of set-off associated with derivative contracts | $ 1,500 | $ 2,200 |
| Reduction to derivative liabilities by rights of set-off associated with derivative contracts | 1,500 | 2,200 |
| Net derivative assets (liabilities) | $ 160 | $ (78) |
| Number of customers representing 10% or more of trade receivables | Customer | 1 | 1 |
| Number of vendors representing a significant portion of non-trade receivables | Vendor | 2 | 3 |
| Trade Receivables | Credit Concentration Risk | Customer One | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 10.00% | 12.00% |
| Trade Receivables | Credit Concentration Risk | Cellular Network Carriers | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 63.00% | 71.00% |
| Non-Trade Receivables | Credit Concentration Risk | Vendor One | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 47.00% | 38.00% |
| Non-Trade Receivables | Credit Concentration Risk | Vendor Two | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 21.00% | 18.00% |
| Non-Trade Receivables | Credit Concentration Risk | Vendor Three | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 14.00% | |
| Accrued Expenses | ||
| Financial Instruments [Line Items] | ||
| Net cash collateral received, derivative instruments | $ 163 | $ 1,000 |
Financial Instruments - Derivat
| Financial Instruments - Derivative Instruments at Gross Fair Value (Detail) - Level 2 - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Foreign exchange contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | $ 671 | $ 1,551 |
| Foreign exchange contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 1,069 | 999 |
| Interest rate contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 728 | 394 |
| Interest rate contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 7 | 13 |
| Derivatives Designated as Hedging Instruments | Foreign exchange contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 518 | 1,442 |
| Derivatives Designated as Hedging Instruments | Foreign exchange contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 935 | 905 |
| Derivatives Designated as Hedging Instruments | Interest rate contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 728 | 394 |
| Derivatives Designated as Hedging Instruments | Interest rate contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 7 | 13 |
| Not Designated as Hedging Instrument | Foreign exchange contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 153 | 109 |
| Not Designated as Hedging Instrument | Foreign exchange contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 134 | 94 |
| Not Designated as Hedging Instrument | Interest rate contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 0 | 0 |
| Not Designated as Hedging Instrument | Interest rate contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | $ 0 | $ 0 |
Financial Instruments - Pre-Tax
| Financial Instruments - Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Cash flow hedges | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | $ 52 | $ 3,481 | $ 1,735 |
| Gains/(Losses) reclassified from AOCI into net income - effective portion | 874 | 4,075 | (170) |
| Cash flow hedges | Foreign exchange contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | 109 | 3,592 | 1,750 |
| Gains/(Losses) reclassified from AOCI into net income - effective portion | 885 | 4,092 | (154) |
| Cash flow hedges | Interest rate contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | (57) | (111) | (15) |
| Gains/(Losses) reclassified from AOCI into net income - effective portion | (11) | (17) | (16) |
| Net investment hedges | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | (258) | 96 | 53 |
| Net investment hedges | Foreign exchange contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | 0 | 167 | 53 |
| Net investment hedges | Foreign currency debt | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | (258) | (71) | 0 |
| Fair value hedges | Interest rate contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) on derivative instruments | 341 | 337 | 39 |
| Gains/(Losses) related to hedged items | $ (341) | $ (337) | $ (39) |
Financial Instruments - Notiona
| Financial Instruments - Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Derivatives Designated as Hedging Instruments | Foreign exchange contracts | ||
| Derivative [Line Items] | ||
| Derivative, notional amount | $ 44,678 | $ 70,054 |
| Credit risk | 518 | 1,385 |
| Derivatives Designated as Hedging Instruments | Interest rate contracts | ||
| Derivative [Line Items] | ||
| Derivative, notional amount | 24,500 | 18,750 |
| Credit risk | 728 | 394 |
| Not Designated as Hedging Instrument | Foreign exchange contracts | ||
| Derivative [Line Items] | ||
| Derivative, notional amount | 54,305 | 49,190 |
| Credit risk | $ 153 | $ 109 |
Consolidated Financial Statem41
| Consolidated Financial Statement Details - Property, Plant and Equipment, Net (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | $ 61,245 | $ 49,257 |
| Accumulated depreciation and amortization | (34,235) | (26,786) |
| Total property, plant and equipment, net | 27,010 | 22,471 |
| Land and Buildings | ||
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | 10,185 | 6,956 |
| Machinery, Equipment and Internal-Use Software | ||
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | 44,543 | 37,038 |
| Leasehold Improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | $ 6,517 | $ 5,263 |
Consolidated Financial Statem42
| Consolidated Financial Statement Details - Other Non-Current Liabilities (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Other Liabilities Disclosure [Abstract] | ||
| Deferred tax liabilities | $ 26,019 | $ 24,062 |
| Other non-current liabilities | 10,055 | 9,365 |
| Total other non-current liabilities | $ 36,074 | $ 33,427 |
Consolidated Financial Statem43
| Consolidated Financial Statement Details - Other Income/(Expense), Net (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Other Income and Expenses [Abstract] | |||
| Interest and dividend income | $ 3,999 | $ 2,921 | $ 1,795 |
| Interest expense | (1,456) | (733) | (384) |
| Other expense, net | (1,195) | (903) | (431) |
| Total other income/(expense), net | $ 1,348 | $ 1,285 | $ 980 |
Acquired Intangible Assets - Co
| Acquired Intangible Assets - Components of Gross and Net Intangible Asset Balances (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Definite-lived and amortizable acquired intangible assets, gross carrying amount | $ 8,912 | $ 8,125 |
| Definite-lived and amortizable acquired intangible assets, accumulated amortization | (5,806) | (4,332) |
| Definite-lived and amortizable acquired intangible assets, net carrying amount | 3,106 | 3,793 |
| Indefinite-lived and non-amortizable acquired intangible assets | 100 | 100 |
| Total acquired intangible assets, gross carrying amount | 9,012 | 8,225 |
| Total acquired intangible assets, net carrying amount | $ 3,206 | $ 3,893 |
Acquired Intangible Assets - Ad
| Acquired Intangible Assets - Additional Information (Detail) - USD ($) $ in Billions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |||
| Amortization expense related to acquired intangible assets | $ 1.5 | $ 1.3 | $ 1.1 |
| Weighted-average amortization period for acquired intangible assets (in years) | 3 years 4 months 24 days |
Acquired Intangible Assets - Ex
| Acquired Intangible Assets - Expected Annual Amortization Expense Related to Acquired Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
| 2,017 | $ 1,197 | |
| 2,018 | 902 | |
| 2,019 | 449 | |
| 2,020 | 255 | |
| 2,021 | 175 | |
| Thereafter | 128 | |
| Definite-lived and amortizable acquired intangible assets, net carrying amount | $ 3,106 | $ 3,793 |
Provision for Income Taxes (Det
| Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Federal: | |||
| Current | $ 7,652 | $ 11,730 | $ 8,624 |
| Deferred | 5,043 | 3,408 | 3,183 |
| Federal income tax expense (benefit) | 12,695 | 15,138 | 11,807 |
| State: | |||
| Current | 990 | 1,265 | 855 |
| Deferred | (138) | (220) | (178) |
| State income tax expense (benefits) | 852 | 1,045 | 677 |
| Foreign: | |||
| Current | 2,105 | 4,744 | 2,147 |
| Deferred | 33 | (1,806) | (658) |
| Foreign income tax expense (benefit) | 2,138 | 2,938 | 1,489 |
| Provision for income taxes | $ 15,685 | $ 19,121 | $ 13,973 |
Income Taxes - Additional Infor
| Income Taxes - Additional Information (Detail) € in Billions | Aug. 30, 2016EUR (€)Subsidiary | Sep. 24, 2016USD ($) | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 28, 2013USD ($) |
| Income Tax Disclosure [Abstract] | |||||
| Foreign pretax earnings | $ 41,100,000,000 | $ 47,600,000,000 | $ 33,600,000,000 | ||
| Statutory tax rate in foreign operations | 12.50% | ||||
| Undistributed earnings of foreign subsidiaries | $ 109,800,000,000 | ||||
| Deferred tax liability related to foreign earnings that may be repatriated | 35,900,000,000 | ||||
| Cash, cash equivalents and marketable securities held by foreign subsidiaries | $ 216,000,000,000 | $ 186,900,000,000 | |||
| Reconciliation of provision for income taxes, statutory federal income tax rate | 35.00% | 35.00% | 35.00% | ||
| Tax benefits from equity awards | $ 379,000,000 | $ 748,000,000 | $ 706,000,000 | ||
| Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage | 50.00% | 50.00% | |||
| Gross unrecognized tax benefits | $ 7,724,000,000 | $ 6,900,000,000 | 4,033,000,000 | $ 2,714,000,000 | |
| Gross unrecognized tax benefits that would affect effective tax rate, if recognized | 2,800,000,000 | 2,500,000,000 | |||
| Unrecognized tax benefits, gross interest and penalties accrued | 1,000,000,000 | 1,300,000,000 | |||
| Recognized interest and penalty expense of tax matters | 295,000,000 | $ 709,000,000 | $ 40,000,000 | ||
| Reasonably possible decrease in gross unrecognized tax benefits over next 12 months, up to | $ 850,000,000 | ||||
| Unfavorable Investigation Outcome, EU State Aid Rules | |||||
| Loss Contingencies [Line Items] | |||||
| Number of subsidiaries impacted by the European Commission tax ruling | Subsidiary | 2 | ||||
| Maximum potential loss related to European Commission tax ruling | € | € 13 |
Income Taxes - Reconciliation o
| Income Taxes - Reconciliation of the Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Income Tax Disclosure [Abstract] | |||
| Computed expected tax | $ 21,480 | $ 25,380 | $ 18,719 |
| State taxes, net of federal effect | 553 | 680 | 469 |
| Indefinitely invested earnings of foreign subsidiaries | (5,582) | (6,470) | (4,744) |
| Domestic production activities deduction | (382) | (426) | (495) |
| Research and development credit, net | (371) | (171) | (88) |
| Other | (13) | 128 | 112 |
| Provision for income taxes | $ 15,685 | $ 19,121 | $ 13,973 |
| Effective tax rate | 25.60% | 26.40% | 26.10% |
Income Taxes - Significant Comp
| Income Taxes - Significant Components of the Company's Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Deferred tax assets: | ||
| Accrued liabilities and other reserves | $ 4,135 | $ 4,205 |
| Basis of capital assets | 2,107 | 2,238 |
| Deferred revenue | 1,717 | 1,941 |
| Deferred cost sharing | 667 | 667 |
| Share-based compensation | 601 | 575 |
| Unrealized losses | 0 | 564 |
| Other | 788 | 721 |
| Total deferred tax assets, net of valuation allowance of $0 | 10,015 | 10,911 |
| Deferred tax liabilities: | ||
| Unremitted earnings of foreign subsidiaries | 31,436 | 26,868 |
| Other | 485 | 303 |
| Total deferred tax liabilities | 31,921 | 27,171 |
| Net deferred tax liabilities | (21,906) | (16,260) |
| Deferred tax assets, valuation allowance | $ 0 | $ 0 |
Income Taxes - Aggregate Change
| Income Taxes - Aggregate Changes in Gross Unrecognized Tax Benefits Excluding Interest and Penalties (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
| Beginning Balance | $ 6,900 | $ 4,033 | $ 2,714 |
| Increases related to tax positions taken during a prior year | 1,121 | 2,056 | 1,295 |
| Decreases related to tax positions taken during a prior year | (257) | (345) | (280) |
| Increases related to tax positions taken during the current year | 1,578 | 1,278 | 882 |
| Decreases related to settlements with taxing authorities | (1,618) | (109) | (574) |
| Decreases related to expiration of statute of limitations | 0 | (13) | (4) |
| Ending Balance | $ 7,724 | $ 6,900 | $ 4,033 |
Debt - Additional Information (
| Debt - Additional Information (Detail) $ in Millions, ¥ in Billions | 12 Months Ended | |||||
| Sep. 24, 2016USD ($) | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 24, 2016JPY (¥) | Jun. 25, 2016USD ($) | Mar. 26, 2016USD ($) | |
| Debt Instrument [Line Items] | ||||||
| Commercial paper | $ 8,105 | $ 8,499 | ||||
| Aggregate principal balance of debt | 78,384 | 55,701 | ||||
| Interest expense | $ 1,400 | $ 722 | $ 381 | |||
| Commercial paper | ||||||
| Debt Instrument [Line Items] | ||||||
| Commercial paper, weighted-average interest rate | 0.45% | 0.14% | 0.45% | |||
| Level 2 | ||||||
| Debt Instrument [Line Items] | ||||||
| Debt instrument fair value | $ 81,700 | $ 54,900 | ||||
| Currency Swaps | ||||||
| Debt Instrument [Line Items] | ||||||
| Derivative, notional amount | $ 1,000 | |||||
| Interest Rate Swap | ||||||
| Debt Instrument [Line Items] | ||||||
| Derivative, notional amount | 1,800 | $ 5,000 | ||||
| Third quarter 2015 Japanese yen-denominated debt issuance | Net investment hedges | ||||||
| Debt Instrument [Line Items] | ||||||
| Debt instrument, face amount | ¥ | ¥ 195.5 | |||||
| Debt instrument, senior notes | $ 1,900 | |||||
| Maximum | ||||||
| Debt Instrument [Line Items] | ||||||
| Commercial paper, maturity period | 9 months |
Debt - Summary of Cash Flows As
| Debt - Summary of Cash Flows Associated With Issuance and Maturities of Commercial Paper (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Maturities less than 90 days: | |||
| Proceeds from (repayments of) commercial paper, net | $ (869) | $ 5,293 | |
| Maturities greater than 90 days: | |||
| Proceeds from commercial paper | 3,632 | 3,851 | |
| Repayments of commercial paper | (3,160) | (6,953) | |
| Proceeds from (repayments of) commercial paper, net | 472 | (3,102) | |
| Total change in commercial paper, net | $ (397) | $ 2,191 | $ 6,306 |
Debt - Summary of Term Debt (De
| Debt - Summary of Term Debt (Detail) | 12 Months Ended | ||
| Sep. 24, 2016USD ($) | Sep. 26, 2015USD ($) | Sep. 24, 2016AUD | |
| Debt Instrument [Line Items] | |||
| Total term debt | $ 78,384,000,000 | $ 55,701,000,000 | |
| Unamortized premium/(discount) and issuance costs, net | (174,000,000) | (248,000,000) | |
| Hedge accounting fair value adjustments | 717,000,000 | 376,000,000 | |
| Less: Current portion of long-term debt | (3,500,000,000) | (2,500,000,000) | |
| Total long-term debt | 75,427,000,000 | 53,329,000,000 | |
| 2013 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | 17,000,000,000 | ||
| 2013 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 2,000,000,000 | $ 3,000,000,000 | |
| Debt instrument maturity year, start | 2,018 | ||
| Debt instrument maturity year, end | 2,018 | ||
| Debt instrument effective interest rate, minimum | 1.10% | 0.51% | |
| Debt instrument effective interest rate, maximum | 1.10% | 1.10% | |
| 2013 debt issuance | Fixed-rate 1.000% - 3.850% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 12,500,000,000 | $ 14,000,000,000 | |
| Debt instrument maturity year, start | 2,018 | ||
| Debt instrument maturity year, end | 2,043 | ||
| Debt instrument effective interest rate, minimum | 1.08% | 0.51% | |
| Debt instrument effective interest rate, maximum | 3.91% | 3.91% | |
| Debt instrument interest rate, minimum | 1.00% | ||
| Debt instrument interest rate, maximum | 3.85% | ||
| 2014 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 12,000,000,000 | ||
| 2014 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 2,000,000,000 | $ 2,000,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,019 | ||
| Debt instrument effective interest rate, minimum | 0.86% | 0.37% | |
| Debt instrument effective interest rate, maximum | 1.09% | 0.60% | |
| 2014 debt issuance | Fixed-rate 1.050% - 4.450% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 10,000,000,000 | $ 10,000,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,044 | ||
| Debt instrument effective interest rate, minimum | 0.85% | 0.37% | |
| Debt instrument effective interest rate, maximum | 4.48% | 4.48% | |
| Debt instrument interest rate, minimum | 1.05% | ||
| Debt instrument interest rate, maximum | 4.45% | ||
| 2015 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 27,300,000,000 | ||
| 2015 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 1,781,000,000 | $ 1,743,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,020 | ||
| Debt instrument effective interest rate, minimum | 0.87% | 0.36% | |
| Debt instrument effective interest rate, maximum | 1.87% | 1.87% | |
| 2015 debt issuance | Fixed-rate 0.350% - 4.375% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 25,144,000,000 | $ 24,958,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,045 | ||
| Debt instrument effective interest rate, minimum | 0.28% | 0.28% | |
| Debt instrument effective interest rate, maximum | 4.51% | 4.51% | |
| Debt instrument interest rate, minimum | 0.35% | ||
| Debt instrument interest rate, maximum | 4.375% | ||
| Second quarter 2016 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 15,500,000,000 | ||
| Second quarter 2016 debt issuance | Floating Rate Notes Due 2019 | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 500,000,000 | ||
| Debt instrument effective interest rate | 1.64% | 1.64% | |
| Second quarter 2016 debt issuance | Floating Rate Notes Due 2021 | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,021 | ||
| Debt instrument, senior notes | $ 500,000,000 | ||
| Debt instrument effective interest rate | 1.95% | 1.95% | |
| Second quarter 2016 debt issuance | Fixed-rate 1.300% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,018 | ||
| Debt instrument, senior notes | $ 500,000,000 | ||
| Debt instrument effective interest rate | 1.32% | 1.32% | |
| Debt instrument interest rate | 1.30% | 1.30% | |
| Second quarter 2016 debt issuance | Fixed-rate 1.700% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 1,000,000,000 | ||
| Debt instrument effective interest rate | 1.71% | 1.71% | |
| Debt instrument interest rate | 1.70% | 1.70% | |
| Second quarter 2016 debt issuance | Fixed-rate 2.250% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,021 | ||
| Debt instrument, senior notes | $ 3,000,000,000 | ||
| Debt instrument effective interest rate | 1.91% | 1.91% | |
| Debt instrument interest rate | 2.25% | 2.25% | |
| Second quarter 2016 debt issuance | Fixed-rate 2.850% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,023 | ||
| Debt instrument, senior notes | $ 1,500,000,000 | ||
| Debt instrument effective interest rate | 2.58% | 2.58% | |
| Debt instrument interest rate | 2.85% | 2.85% | |
| Second quarter 2016 debt issuance | Fixed-rate 3.250% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,026 | ||
| Debt instrument, senior notes | $ 3,250,000,000 | ||
| Debt instrument effective interest rate | 2.51% | 2.51% | |
| Debt instrument interest rate | 3.25% | 3.25% | |
| Second quarter 2016 debt issuance | Fixed-rate 4.500% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,036 | ||
| Debt instrument, senior notes | $ 1,250,000,000 | ||
| Debt instrument effective interest rate | 4.54% | 4.54% | |
| Debt instrument interest rate | 4.50% | 4.50% | |
| Second quarter 2016 debt issuance | Fixed-rate 4.650% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,046 | ||
| Debt instrument, senior notes | $ 4,000,000,000 | ||
| Debt instrument effective interest rate | 4.58% | 4.58% | |
| Debt instrument interest rate | 4.65% | 4.65% | |
| Third quarter 2016 Australian dollar denominated debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | AUD | AUD 1,400,000,000 | ||
| Third quarter 2016 Australian dollar denominated debt issuance | Fixed-rate 2.650% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,020 | ||
| Debt instrument, senior notes | $ 493,000,000 | ||
| Debt instrument effective interest rate | 1.92% | 1.92% | |
| Debt instrument interest rate | 2.65% | 2.65% | |
| Third quarter 2016 Australian dollar denominated debt issuance | Fixed-rate 3.350% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,024 | ||
| Debt instrument, senior notes | $ 342,000,000 | ||
| Debt instrument effective interest rate | 2.61% | 2.61% | |
| Debt instrument interest rate | 3.35% | 3.35% | |
| Third quarter 2016 Australian dollar denominated debt issuance | Fixed-rate 3.600% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,026 | ||
| Debt instrument, senior notes | $ 247,000,000 | ||
| Debt instrument effective interest rate | 2.84% | 2.84% | |
| Debt instrument interest rate | 3.60% | 3.60% | |
| Third quarter 2016 debt issuance | Fixed-rate 4.150% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,046 | ||
| Debt instrument, senior notes | $ 1,377,000,000 | ||
| Debt instrument effective interest rate | 4.15% | 4.15% | |
| Debt instrument, face amount | $ 1,400,000,000 | ||
| Debt instrument interest rate | 4.15% | 4.15% | |
| Fourth quarter 2016 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 7,000,000,000 | ||
| Fourth quarter 2016 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 350,000,000 | ||
| Debt instrument effective interest rate | 0.91% | 0.91% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 1.100% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 1,150,000,000 | ||
| Debt instrument effective interest rate | 1.13% | 1.13% | |
| Debt instrument interest rate | 1.10% | 1.10% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 1.550% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,021 | ||
| Debt instrument, senior notes | $ 1,250,000,000 | ||
| Debt instrument effective interest rate | 1.40% | 1.40% | |
| Debt instrument interest rate | 1.55% | 1.55% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 2.450% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,026 | ||
| Debt instrument, senior notes | $ 2,250,000,000 | ||
| Debt instrument effective interest rate | 2.15% | 2.15% | |
| Debt instrument interest rate | 2.45% | 2.45% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 3.850% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,046 | ||
| Debt instrument, senior notes | $ 2,000,000,000 | ||
| Debt instrument effective interest rate | 3.86% | 3.86% | |
| Debt instrument interest rate | 3.85% | 3.85% |
Debt - Debt Instrument Future P
| Debt - Debt Instrument Future Principal Payments (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Debt Disclosure [Abstract] | ||
| 2,017 | $ 3,500 | |
| 2,018 | 6,500 | |
| 2,019 | 6,834 | |
| 2,020 | 6,454 | |
| 2,021 | 7,750 | |
| Thereafter | 47,346 | |
| Total term debt | $ 78,384 | $ 55,701 |
Shareholders' Equity - Summary
| Shareholders' Equity - Summary of Dividends Declared and Paid (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Equity [Abstract] | |||||||||||
| Dividends per share (in dollars per share) | $ 0.57 | $ 0.57 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.47 | $ 0.47 | $ 2.18 | $ 1.98 | $ 1.82 |
| Amount | $ 3,071 | $ 3,117 | $ 2,879 | $ 2,898 | $ 2,950 | $ 2,997 | $ 2,734 | $ 2,750 | $ 11,965 | $ 11,431 |
Shareholders' Equity - Addition
| Shareholders' Equity - Additional Information (Detail) - USD ($) | Sep. 24, 2016 | Apr. 30, 2016 | Sep. 26, 2015 |
| Equity [Abstract] | |||
| Maximum amount authorized for repurchase of common stock | $ 175,000,000,000 | $ 140,000,000,000 | |
| Share repurchase program, utilized amount | $ 133,000,000,000 |
Shareholders' Equity - Accelera
| Shareholders' Equity - Accelerated Share Repurchase Activity and Related Information (Detail) - USD ($) $ / shares in Units, shares in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Jul. 31, 2015 | Aug. 31, 2016 | Apr. 30, 2016 | Feb. 28, 2015 | Dec. 31, 2014 | |
| August 2016 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2016-11 | |||||||
| Number of shares repurchased (in shares) | 22,468 | |||||||
| ASR amount | $ 3,000,000,000 | |||||||
| May 2016 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2016-08 | |||||||
| Number of shares repurchased (in shares) | 12,300 | 48,200 | 60,452 | |||||
| Average repurchase price per share (in dollars per share) | $ 99.25 | |||||||
| ASR amount | $ 6,000,000,000 | |||||||
| November 2015 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2016-04 | |||||||
| Number of shares repurchased (in shares) | 29,122 | |||||||
| Average repurchase price per share (in dollars per share) | $ 103.02 | |||||||
| ASR amount | $ 3,000,000,000 | |||||||
| May 2015 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2015-07 | |||||||
| Number of shares repurchased (in shares) | 48,293 | |||||||
| Average repurchase price per share (in dollars per share) | $ 124.24 | |||||||
| ASR amount | $ 6,000,000,000 | |||||||
| August 2014 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2015-02 | |||||||
| Number of shares repurchased (in shares) | 81,525 | |||||||
| Average repurchase price per share (in dollars per share) | $ 110.40 | |||||||
| ASR amount | $ 9,000,000,000 | |||||||
| January 2014 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2014-12 | |||||||
| Number of shares repurchased (in shares) | 134,247 | |||||||
| Average repurchase price per share (in dollars per share) | $ 89.39 | |||||||
| ASR amount | $ 12,000,000,000 |
Shareholders' Equity - Repurcha
| Shareholders' Equity - Repurchases of Common Shares in Open Market (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Stock Repurchase Program [Line Items] | |||||||||||
| Amount | $ 29,000 | $ 36,026 | $ 45,000 | ||||||||
| Open Market Repurchases | |||||||||||
| Stock Repurchase Program [Line Items] | |||||||||||
| Number of shares repurchased (in shares) | 28,579 | 41,238 | 71,766 | 25,984 | 121,802 | 31,231 | 56,400 | 45,704 | 167,567 | 255,137 | |
| Average repurchase price per share (in dollars per share) | $ 104.97 | $ 97 | $ 97.54 | $ 115.45 | $ 115.15 | $ 128.08 | $ 124.11 | $ 109.40 | |||
| Amount | $ 3,000 | $ 4,000 | $ 7,000 | $ 3,000 | $ 14,026 | $ 4,000 | $ 7,000 | $ 5,000 | $ 17,000 | $ 30,026 |
Comprehensive Income - Pre-tax
| Comprehensive Income - Pre-tax Amounts Reclassified from AOCI into Consolidated Statements of Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Revenue | $ (46,852) | $ (42,358) | $ (50,557) | $ (75,872) | $ (51,501) | $ (49,605) | $ (58,010) | $ (74,599) | $ (215,639) | $ (233,715) | $ (182,795) |
| Cost of sales | 131,376 | 140,089 | 112,258 | ||||||||
| Other income/(expense), net | 1,348 | 1,285 | 980 | ||||||||
| Income before provision for income taxes | (61,372) | (72,515) | $ (53,483) | ||||||||
| Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Income before provision for income taxes | (785) | (4,036) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Derivative Instruments | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Income before provision for income taxes | (872) | (4,127) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Derivative Instruments | Foreign exchange contracts | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Revenue | (865) | (2,432) | |||||||||
| Cost of sales | (130) | (2,168) | |||||||||
| Other income/(expense), net | (111) | (456) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Derivative Instruments | Interest rate contracts | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Other income/(expense), net | (12) | (17) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Marketable Securities | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Other income/(expense), net | $ (87) | $ (91) |
Comprehensive Income - Change i
| Comprehensive Income - Change in Accumulated Other Comprehensive Income by Component (Detail) - USD ($) $ in Millions | 12 Months Ended | |
| Sep. 24, 2016 | Sep. 26, 2015 | |
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | $ 119,355 | $ 111,547 |
| Other comprehensive income/(loss) before reclassifications | 2,526 | 1,987 |
| Amounts reclassified from AOCI | (785) | (4,036) |
| Tax effect | (762) | 622 |
| Other comprehensive income/(loss) | 979 | (1,427) |
| Ending Balances | 128,249 | 119,355 |
| Cumulative Foreign Currency Translation | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | (653) | (242) |
| Other comprehensive income/(loss) before reclassifications | 67 | (612) |
| Amounts reclassified from AOCI | 0 | 0 |
| Tax effect | 8 | 201 |
| Other comprehensive income/(loss) | 75 | (411) |
| Ending Balances | (578) | (653) |
| Unrealized Gains/Losses on Derivative Instruments | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | 772 | 1,364 |
| Other comprehensive income/(loss) before reclassifications | 14 | 3,346 |
| Amounts reclassified from AOCI | (872) | (4,127) |
| Tax effect | 124 | 189 |
| Other comprehensive income/(loss) | (734) | (592) |
| Ending Balances | 38 | 772 |
| Unrealized Gains/Losses on Marketable Securities | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | (464) | (40) |
| Other comprehensive income/(loss) before reclassifications | 2,445 | (747) |
| Amounts reclassified from AOCI | 87 | 91 |
| Tax effect | (894) | 232 |
| Other comprehensive income/(loss) | 1,638 | (424) |
| Ending Balances | 1,174 | (464) |
| Accumulated Other Comprehensive Income/(Loss) | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | (345) | 1,082 |
| Ending Balances | $ 634 | $ (345) |
Benefit Plans - Additional Info
| Benefit Plans - Additional Information (Detail) - USD ($) | 12 Months Ended | |||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | Mar. 29, 2014 | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Maximum portion of pre-tax earnings under Savings Plan that can be deferred by participating U.S. employees | $ 18,000 | |||
| Fair value of vested RSUs as of vesting date | $ 5,100,000,000 | $ 4,800,000,000 | $ 3,400,000,000 | |
| The total shares withheld upon vesting of RSUs (in shares) | 15,900,000 | 14,100,000 | 15,600,000 | |
| Taxes paid related to net share settlement of equity awards | $ 1,700,000,000 | $ 1,600,000,000 | $ 1,200,000,000 | |
| Income tax benefit related to share-based compensation expense | 1,400,000,000 | $ 1,200,000,000 | $ 1,000,000,000 | |
| Total unrecognized compensation cost on stock options and RSUs | $ 7,500,000,000 | |||
| Total unrecognized compensation cost on stock options and RSUs, weighted-average recognition period (in years) | 2 years 7 months 12 days | |||
| Employee Stock Purchase Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved for future issuance under Employee Benefit Plans (in shares) | 47,000,000 | |||
| Employee common stock purchases through payroll deductions, price as a percentage of fair market value | 85.00% | |||
| Employee stock purchase plan offering period | 6 months | |||
| Payroll deductions as a percentage of employee compensation, maximum | 10.00% | |||
| Minimum | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Rate of contribution to Savings Plan as a percentage of employees contribution | 50.00% | |||
| Maximum | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Rate of contribution to Savings Plan as a percentage of employees contribution | 100.00% | |||
| Rate of contribution to Savings Plan as a percentage of employees earning | 6.00% | |||
| Maximum | Employee Stock Purchase Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Employee stock purchase program authorized amount | $ 25,000 | |||
| Employee Stock Plan, 2014 Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares authorized for future issuance under stock plans (in shares) | 385,000,000 | |||
| Shares reserved for future issuance under Employee Benefit Plans (in shares) | 386,400,000 | |||
| Employee Stock Plan, 2014 Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| RSUs granted vesting period | 4 years | |||
| Number of common stock issued per RSU upon vesting | 1 | |||
| Reduction in number of shares available for grant per share issued with respect to RSUs granted | 2 | |||
| Increase in number of shares available for grant per RSU cancelled or withheld for tax withholding | 2 | |||
| Employee Stock Plan, 2003 Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Number of common stock issued per RSU upon vesting | 1 | |||
| Employee Stock Plan, 2003 Plan | Employee Stock Option | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Options granted exercisable period | 4 years | |||
| Employee Stock Plan, 2003 Plan | Minimum | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| RSUs granted vesting period | 2 years | |||
| Employee Stock Plan, 2003 Plan | Minimum | Employee Stock Option | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Expiration term of options granted under Employee Benefit Plans | 7 years | |||
| Employee Stock Plan, 2003 Plan | Maximum | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| RSUs granted vesting period | 4 years | |||
| Employee Stock Plan, 2003 Plan | Maximum | Employee Stock Option | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Expiration term of options granted under Employee Benefit Plans | 10 years | |||
| Directors Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved for future issuance under Employee Benefit Plans (in shares) | 1,100,000 | |||
| Share based compensation, expiration date | Nov. 9, 2019 | |||
| Directors Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Increase in number of shares available for grant per RSU cancelled or withheld for tax withholding | 2 |
Benefit Plans - Restricted Stoc
| Benefit Plans - Restricted Stock Units Activity and Related Information (Detail) - Restricted Stock Units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Number of Restricted Stock Units | |||
| Beginning balance (in shares) | 101,467 | 103,822 | 93,284 |
| Restricted stock units granted (in shares) | 49,468 | 45,587 | 59,269 |
| Restricted stock units vested (in shares) | (46,313) | (41,684) | (43,111) |
| Restricted stock units cancelled (in shares) | (5,533) | (6,258) | (5,620) |
| Ending balance (in shares) | 99,089 | 101,467 | 103,822 |
| Weighted-Average Grant Date Fair Value Per Share | |||
| Beginning balance (in dollars per share) | $ 85.77 | $ 70.98 | $ 62.24 |
| Restricted stock units granted (in dollars per share) | 109.28 | 105.51 | 74.54 |
| Restricted stock units vested (in dollars per share) | 84.44 | 71.32 | 57.29 |
| Restricted stock units cancelled (in dollars per share) | 96.48 | 80.34 | 68.47 |
| Ending balance (in dollars per share) | $ 97.54 | $ 85.77 | $ 70.98 |
| Aggregate Intrinsic Value | |||
| Aggregate intrinsic value of Restricted stock units | $ 11,168 |
Benefit Plans - Summary of Shar
| Benefit Plans - Summary of Share-Based Compensation Expense (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | $ 4,210 | $ 3,586 | $ 2,863 |
| Cost of sales | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | 769 | 575 | 450 |
| Research and Development | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | 1,889 | 1,536 | 1,216 |
| Selling, General and Administrative | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | $ 1,552 | $ 1,475 | $ 1,197 |
Commitments and Contingencies -
| Commitments and Contingencies - Changes in Accrued Warranties and Related Costs (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Movement in Standard Product Warranty Accrual [Roll Forward] | |||
| Beginning accrued warranty and related costs | $ 4,780 | $ 4,159 | $ 2,967 |
| Cost of warranty claims | (4,663) | (4,401) | (3,760) |
| Accruals for product warranty | 3,585 | 5,022 | 4,952 |
| Ending accrued warranty and related costs | $ 3,702 | $ 4,780 | $ 4,159 |
Commitments and Contingencies66
| Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||||
| Dec. 31, 2015 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | May 18, 2015 | Mar. 06, 2014 | Aug. 24, 2012 | |
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Purchase commitments maximum period | 150 days | ||||||
| Total future minimum lease payments under noncancelable operating leases | $ 7,627 | ||||||
| Rent expense under cancelable and noncancelable operating leases | $ 939 | $ 794 | $ 717 | ||||
| Samsung Electronics Co Ltd | |||||||
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Result of legal proceedings | $ 1,050 | ||||||
| Award from legal proceeding | $ 548 | $ 930 | |||||
| Samsung Electronics Co Ltd | Sales Revenue, Net | |||||||
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Proceeds from legal settlement | $ 548 | ||||||
| Maximum | Major Facility Lease | |||||||
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Term of leases | 10 years |
Commitments and Contingencies67
| Commitments and Contingencies - Future Minimum Lease Payments under Noncancelable Operating Leases (Detail) $ in Millions | Sep. 24, 2016USD ($) |
| Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
| 2,017 | $ 929 |
| 2,018 | 919 |
| 2,019 | 915 |
| 2,020 | 889 |
| 2,021 | 836 |
| Thereafter | 3,139 |
| Total | $ 7,627 |
Segment Information and Geogr68
| Segment Information and Geographic Data - Summary Information by Operating Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| Operating income | 60,024 | 71,230 | 52,503 | ||||||||
| Americas | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 86,613 | 93,864 | 80,095 | ||||||||
| Operating income | 28,172 | 31,186 | 26,158 | ||||||||
| Europe | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 49,952 | 50,337 | 44,285 | ||||||||
| Operating income | 15,348 | 16,527 | 14,434 | ||||||||
| Greater China | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 48,492 | 58,715 | 31,853 | ||||||||
| Operating income | 18,835 | 23,002 | 11,039 | ||||||||
| Japan | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 16,928 | 15,706 | 15,314 | ||||||||
| Operating income | 7,165 | 7,617 | 6,904 | ||||||||
| Rest of Asia Pacific | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 13,654 | 15,093 | 11,248 | ||||||||
| Operating income | $ 4,781 | $ 5,518 | $ 3,674 |
Segment Information and Geogr69
| Segment Information and Geographic Data - Reconciliation of Segment Operating Income to Consolidated Statements of Operations (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Operating income | $ 60,024 | $ 71,230 | $ 52,503 |
| Research and development expense | (10,045) | (8,067) | (6,041) |
| Operating income | 60,024 | 71,230 | 52,503 |
| Operating Segments | |||
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Operating income | 74,301 | 83,850 | 62,209 |
| Operating income | 74,301 | 83,850 | 62,209 |
| Segment Reconciling Items | |||
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Research and development expense | (10,045) | (8,067) | (6,041) |
| Corporate Non-Segment | |||
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Other corporate expenses, net | $ (4,232) | $ (4,553) | $ (3,665) |
Segment Information and Geogr70
| Segment Information and Geographic Data - Additional Information (Detail) | 12 Months Ended |
| Sep. 24, 2016 | |
| Segment Reporting [Abstract] | |
| Countries representing greater than 10% of net sales | The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2016, 2015 and 2014 |
| Customers representing greater than 10% of net sales | no single customer that accounted for more than 10% of net sales in 2016, 2015 or 2014 |
Segment Information and Geogr71
| Segment Information and Geographic Data - Net Sales (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| U.S. | |||||||||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | 75,667 | 81,732 | 68,909 | ||||||||
| CHINA | |||||||||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | 46,349 | 56,547 | 30,638 | ||||||||
| Other countries | |||||||||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | $ 93,623 | $ 95,436 | $ 83,248 |
Segment Information and Geogr72
| Segment Information and Geographic Data - Long-Lived Assets (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | $ 27,010 | $ 23,784 |
| U.S. | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | 16,364 | 12,022 |
| CHINA | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | 7,807 | 8,722 |
| Other countries | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | $ 2,839 | $ 3,040 |
Segment Information and Geogr73
| Segment Information and Geographic Data - Net Sales by Product (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| iPhone | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 136,700 | 155,041 | 101,991 | ||||||||
| iPad | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 20,628 | 23,227 | 30,283 | ||||||||
| Mac | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 22,831 | 25,471 | 24,079 | ||||||||
| Services | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 24,348 | 19,909 | 18,063 | ||||||||
| Other Products | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | $ 11,132 | $ 10,067 | $ 8,379 |
Selected Quarterly Financial 74
| Selected Quarterly Financial Information - Summary of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Selected Quarterly Financial Information [Abstract] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| Gross margin | 17,813 | 16,106 | 19,921 | 30,423 | 20,548 | 19,681 | 23,656 | 29,741 | 84,263 | 93,626 | 70,537 |
| Net income | $ 9,014 | $ 7,796 | $ 10,516 | $ 18,361 | $ 11,124 | $ 10,677 | $ 13,569 | $ 18,024 | $ 45,687 | $ 53,394 | $ 39,510 |
| Earnings per share: | |||||||||||
| Basic (in dollars per share) | $ 1.68 | $ 1.43 | $ 1.91 | $ 3.30 | $ 1.97 | $ 1.86 | $ 2.34 | $ 3.08 | $ 8.35 | $ 9.28 | $ 6.49 |
| Diluted (in dollars per share) | $ 1.67 | $ 1.42 | $ 1.90 | $ 3.28 | $ 1.96 | $ 1.85 | $ 2.33 | $ 3.06 | $ 8.31 | $ 9.22 | $ 6.45 |
Investing activities:Sep. 24, 2016Sep. 26, 2015Sep. 27, 2014
Purchases of marketable securities(142,428)(166,402)(217,128)
Proceeds from maturities of marketable securities21,25814,53818,810
Proceeds from sales of marketable securities90,536107,447189,301
Payments made in connection with business acquisitions, net(297)(343)(3,765)
Payments for acquisition of property, plant and equipment(12,734)(11,247)(9,571)
Payments for acquisition of intangible assets(814)(241)(242)
Payments for strategic investments(1,388)0(10)
Other(110)(26)26
Cash used in investing activities(45,977)(56,274)(22,579)
Financing activities:
Proceeds from issuance of common stock495543730
Excess tax benefits from equity awards407749739
Payments for taxes related to net share settlement of equity
awards
(1,570)(1,499)(1,158)
Payments for dividends and dividend equivalents(12,150)(11,561)(11,126)
Repurchases of common stock-Treasury Stock(29,722)(35,253)(45,000)
Proceeds from issuance of long term debt, net24,95427,11411,960
Repayments of term debt(2,500)00
Change in commercial paper, net(397)2,1916,306
Cash used in financing activities(20,483)(17,716)(37,549)
Increase/(Decrease) in cash and cash equivalents(636)7,276(415)
Cash and cash equivalents, end of the year20,48421,12013,844
Document and Entity Information
| Document and Entity Information - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Oct. 14, 2016 | Mar. 25, 2016 | |
| Document And Entity Information [Abstract] | |||
| Document Type | 10-K | ||
| Amendment Flag | false | ||
| Document Period End Date | Sep. 24, 2016 | ||
| Document Fiscal Year Focus | 2,016 | ||
| Document Fiscal Period Focus | FY | ||
| Trading Symbol | AAPL | ||
| Entity Registrant Name | APPLE INC | ||
| Entity Central Index Key | 320,193 | ||
| Current Fiscal Year End Date | --09-24 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Common Stock, Shares Outstanding | 5,332,313 | ||
| Entity Public Float | $ 578,807 |
CONSOLIDATED STATEMENTS OF OPER
| CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Income Statement [Abstract] | |||
| Net sales | $ 215,639 | $ 233,715 | $ 182,795 |
| Cost of sales | 131,376 | 140,089 | 112,258 |
| Gross margin | 84,263 | 93,626 | 70,537 |
| Operating expenses: | |||
| Research and development | 10,045 | 8,067 | 6,041 |
| Selling, general and administrative | 14,194 | 14,329 | 11,993 |
| Total operating expenses | 24,239 | 22,396 | 18,034 |
| Operating income | 60,024 | 71,230 | 52,503 |
| Other income/(expense), net | 1,348 | 1,285 | 980 |
| Income before provision for income taxes | 61,372 | 72,515 | 53,483 |
| Provision for income taxes | 15,685 | 19,121 | 13,973 |
| Net income | $ 45,687 | $ 53,394 | $ 39,510 |
| Earnings per share: | |||
| Basic (in dollars per share) | $ 8.35 | $ 9.28 | $ 6.49 |
| Diluted (in dollars per share) | $ 8.31 | $ 9.22 | $ 6.45 |
| Shares used in computing earnings per share: | |||
| Basic (in shares) | 5,470,820 | 5,753,421 | 6,085,572 |
| Diluted (in shares) | 5,500,281 | 5,793,069 | 6,122,663 |
| Cash dividends declared per share (in dollars per share) | $ 2.18 | $ 1.98 | $ 1.82 |
CONSOLIDATED STATEMENTS OF COMP
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Statement of Comprehensive Income [Abstract] | |||
| Net income | $ 45,687 | $ 53,394 | $ 39,510 |
| Other comprehensive income/(loss): | |||
| Change in foreign currency translation, net of tax effects of $8, $201 and $50, respectively | 75 | (411) | (137) |
| Change in unrealized gains/losses on derivative instruments: | |||
| Change in fair value of derivatives, net of tax benefit/(expense) of $(7), $(441) and $(297), respectively | 7 | 2,905 | 1,390 |
| Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $131, $630 and $(36), respectively | (741) | (3,497) | 149 |
| Total change in unrealized gains/losses on derivative instruments, net of tax | (734) | (592) | 1,539 |
| Change in unrealized gains/losses on marketable securities: | |||
| Change in fair value of marketable securities, net of tax benefit/(expense) of $(863), $264 and $(153), respectively | 1,582 | (483) | 285 |
| Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(31), $(32) and $71, respectively | 56 | 59 | (134) |
| Total change in unrealized gains/losses on marketable securities, net of tax | 1,638 | (424) | 151 |
| Total other comprehensive income/(loss) | 979 | (1,427) | 1,553 |
| Total comprehensive income | $ 46,666 | $ 51,967 | $ 41,063 |
CONSOLIDATED STATEMENTS OF COM4
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Change in foreign currency translation, tax effects | $ 8 | $ 201 | $ 50 |
| Change in fair value of derivatives, tax benefit/(expense) | (7) | (441) | (297) |
| Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit) | 131 | 630 | (36) |
| Change in fair value of marketable securities, tax benefit/(expense) | (863) | 264 | (153) |
| Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit) | $ (31) | $ (32) | $ 71 |
CONSOLIDATED BALANCE SHEETS
| CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Current assets: | ||
| Cash and cash equivalents | $ 20,484 | $ 21,120 |
| Short-term marketable securities | 46,671 | 20,481 |
| Accounts receivable, less allowances of $53 and $63, respectively | 15,754 | 16,849 |
| Inventories | 2,132 | 2,349 |
| Vendor non-trade receivables | 13,545 | 13,494 |
| Other current assets | 8,283 | 15,085 |
| Total current assets | 106,869 | 89,378 |
| Long-term marketable securities | 170,430 | 164,065 |
| Property, plant and equipment, net | 27,010 | 22,471 |
| Goodwill | 5,414 | 5,116 |
| Acquired intangible assets, net | 3,206 | 3,893 |
| Other non-current assets | 8,757 | 5,422 |
| Total assets | 321,686 | 290,345 |
| Current liabilities: | ||
| Accounts payable | 37,294 | 35,490 |
| Accrued expenses | 22,027 | 25,181 |
| Deferred revenue | 8,080 | 8,940 |
| Commercial paper | 8,105 | 8,499 |
| Current portion of long-term debt | 3,500 | 2,500 |
| Total current liabilities | 79,006 | 80,610 |
| Deferred revenue, non-current | 2,930 | 3,624 |
| Long-term debt | 75,427 | 53,329 |
| Other non-current liabilities | 36,074 | 33,427 |
| Total liabilities | 193,437 | 170,990 |
| Commitments and contingencies | ||
| Shareholders’ equity: | ||
| Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued and outstanding, respectively | 31,251 | 27,416 |
| Retained earnings | 96,364 | 92,284 |
| Accumulated other comprehensive income/(loss) | 634 | (345) |
| Total shareholders’ equity | 128,249 | 119,355 |
| Total liabilities and shareholders’ equity | $ 321,686 | $ 290,345 |
CONSOLIDATED BALANCE SHEETS (Pa
| CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowances | $ 53 | $ 63 |
| Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
| Common stock, shares issued (in shares) | 5,336,166,000 | 5,578,753,000 |
| Common stock, shares outstanding (in shares) | 5,336,166,000 | 5,578,753,000 |
| Common stock, shares authorized (in shares) | 12,600,000,000 | 12,600,000,000 |
CONSOLIDATED STATEMENTS OF SHAR
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Millions | Total | Common Stock and Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) |
| Beginning Balances (in shares) at Sep. 28, 2013 | 6,294,494 | |||
| Beginning Balances at Sep. 28, 2013 | $ 123,549 | $ 19,764 | $ 104,256 | $ (471) |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
| Net income | 39,510 | 0 | 39,510 | 0 |
| Other comprehensive income/(loss) | 1,553 | 0 | 0 | 1,553 |
| Dividends and dividend equivalents declared | (11,215) | $ 0 | (11,215) | 0 |
| Repurchase of common stock (in shares) | (488,677) | |||
| Repurchase of common stock | (45,000) | $ 0 | (45,000) | 0 |
| Share-based compensation | 2,863 | $ 2,863 | 0 | 0 |
| Common stock issued, net of shares withheld for employee taxes (in shares) | 60,344 | |||
| Common stock issued, net of shares withheld for employee taxes | (448) | $ (49) | (399) | 0 |
| Tax benefit from equity awards, including transfer pricing adjustments | 735 | $ 735 | 0 | 0 |
| Ending Balances (in shares) at Sep. 27, 2014 | 5,866,161 | |||
| Ending Balances at Sep. 27, 2014 | 111,547 | $ 23,313 | 87,152 | 1,082 |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
| Net income | 53,394 | 0 | 53,394 | 0 |
| Other comprehensive income/(loss) | (1,427) | 0 | 0 | (1,427) |
| Dividends and dividend equivalents declared | (11,627) | $ 0 | (11,627) | 0 |
| Repurchase of common stock (in shares) | (325,032) | |||
| Repurchase of common stock | (36,026) | $ 0 | (36,026) | 0 |
| Share-based compensation | 3,586 | $ 3,586 | 0 | 0 |
| Common stock issued, net of shares withheld for employee taxes (in shares) | 37,624 | |||
| Common stock issued, net of shares withheld for employee taxes | (840) | $ (231) | (609) | 0 |
| Tax benefit from equity awards, including transfer pricing adjustments | $ 748 | $ 748 | 0 | 0 |
| Ending Balances (in shares) at Sep. 26, 2015 | 5,578,753 | 5,578,753 | ||
| Ending Balances at Sep. 26, 2015 | $ 119,355 | $ 27,416 | 92,284 | (345) |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
| Net income | 45,687 | 0 | 45,687 | 0 |
| Other comprehensive income/(loss) | 979 | 0 | 0 | 979 |
| Dividends and dividend equivalents declared | (12,188) | $ 0 | (12,188) | 0 |
| Repurchase of common stock (in shares) | (279,609) | |||
| Repurchase of common stock | (29,000) | $ 0 | (29,000) | 0 |
| Share-based compensation | 4,262 | $ 4,262 | 0 | 0 |
| Common stock issued, net of shares withheld for employee taxes (in shares) | 37,022 | |||
| Common stock issued, net of shares withheld for employee taxes | (1,225) | $ (806) | (419) | 0 |
| Tax benefit from equity awards, including transfer pricing adjustments | $ 379 | $ 379 | 0 | 0 |
| Ending Balances (in shares) at Sep. 24, 2016 | 5,336,166 | 5,336,166 | ||
| Ending Balances at Sep. 24, 2016 | $ 128,249 | $ 31,251 | $ 96,364 | $ 634 |
CONSOLIDATED STATEMENTS OF CASH
| Apple Inc.--CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Statement of Cash Flows [Abstract] | |||
| Cash and cash equivalents, beginning of the year | $ 21,120 | $ 13,844 | $ 14,259 |
| Operating activities: | |||
| Net income | 45,687 | 53,394 | 39,510 |
| Adjustments to reconcile net income to cash generated by operating activities: | |||
| Depreciation and amortization | 10,505 | 11,257 | 7,946 |
| Share-based compensation expense | 4,210 | 3,586 | 2,863 |
| Deferred income tax expense | 4,938 | 1,382 | 2,347 |
| Changes in operating assets and liabilities: | |||
| Accounts receivable, net | 1,095 | 611 | (4,232) |
| Inventories | 217 | (238) | (76) |
| Vendor non-trade receivables | (51) | (3,735) | (2,220) |
| Other current and non-current assets | 1,090 | (179) | 167 |
| Accounts payable | 1,791 | 5,400 | 5,938 |
| Deferred revenue | (1,554) | 1,042 | 1,460 |
| Other current and non-current liabilities | (2,104) | 8,746 | 6,010 |
| Cash generated by operating activities | 65,824 | 81,266 | 59,713 |
| Investing activities: | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 |
| Purchases of marketable securities | (142,428) | (166,402) | (217,128) |
| Proceeds from maturities of marketable securities | 21,258 | 14,538 | 18,810 |
| Proceeds from sales of marketable securities | 90,536 | 107,447 | 189,301 |
| Payments made in connection with business acquisitions, net | (297) | (343) | (3,765) |
| Payments for acquisition of property, plant and equipment | (12,734) | (11,247) | (9,571) |
| Payments for acquisition of intangible assets | (814) | (241) | (242) |
| Payments for strategic investments | (1,388) | 0 | (10) |
| Other | (110) | (26) | 26 |
| Cash used in investing activities | (45,977) | (56,274) | (22,579) |
| Financing activities: | |||
| Proceeds from issuance of common stock | 495 | 543 | 730 |
| Excess tax benefits from equity awards | 407 | 749 | 739 |
| Payments for taxes related to net share settlement of equity awards | (1,570) | (1,499) | (1,158) |
| Payments for dividends and dividend equivalents | (12,150) | (11,561) | (11,126) |
| Repurchases of common stock-Treasury Stock | (29,722) | (35,253) | (45,000) |
| Proceeds from issuance of long term debt, net | 24,954 | 27,114 | 11,960 |
| Repayments of term debt | (2,500) | 0 | 0 |
| Change in commercial paper, net | (397) | 2,191 | 6,306 |
| Cash used in financing activities | (20,483) | (17,716) | (37,549) |
| Increase/(Decrease) in cash and cash equivalents | (636) | 7,276 | (415) |
| Cash and cash equivalents, end of the year | 20,484 | 21,120 | 13,844 |
| Supplemental cash flow disclosure: | |||
| Cash paid for income taxes, net | 10,444 | 13,252 | 10,026 |
| Cash paid for interest | $ 1,316 | $ 514 | $ 339 |
Summary of Significant Accounti
| Summary of Significant Accounting Policies | 12 Months Ended |
| Sep. 24, 2016 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Apple Inc. and its wholly-owned subsidiaries (collectively “Apple” or the “Company”) designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the Company sells a variety of third-party Apple-compatible products, including application software and various accessories through its retail and online stores. The Company sells to consumers, small and mid-sized businesses and education, enterprise and government customers. Basis of Presentation and Preparation The accompanying consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period’s presentation. The Company’s fiscal year is the 52 or 53 -week period that ends on the last Saturday of September. The Company’s fiscal years 2016 , 2015 and 2014 ended on September 24, 2016 , September 26, 2015 and September 27, 2014 , respectively, and each spanned 52 weeks. An additional week is included in the first fiscal quarter approximately every five or six years to realign fiscal quarters with calendar quarters, which will next occur in the first quarter of the Company's fiscal year ending September 30, 2017. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. During 2016, the Company adopted an accounting standard that simplified the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The Company has adopted this accounting standard prospectively; accordingly, the prior period amounts in the Company’s Consolidated Balance Sheets within this Annual Report on Form 10-K were not adjusted to conform to the new accounting standard. The adoption of this accounting standard was not material to the Company’s consolidated financial statements. Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware. For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations. The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and iBooks Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. Revenue from AppleCare service and support contracts is deferred and recognized over the service coverage periods. AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty. The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Revenue Recognition for Arrangements with Multiple Deliverables For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. For multi-element arrangements accounted for in accordance with industry specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered. For sales of qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential to the functionality of the hardware device delivered at the time of sale. The second deliverable is the embedded right included with qualifying devices to receive on a when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. The third deliverable is the non-software services to be provided to qualifying devices. The Company allocates revenue between these deliverables using the relative selling price method. Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred. The Company’s process for determining its ESP for deliverables without VSOE or TPE considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, product specific business objectives, length of time a particular version of a device has been available, estimated cost to provide the non-software services and the relative ESP of the upgrade rights and non-software services as compared to the total selling price of the product. Shipping Costs Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales. Warranty Costs The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates. Software Development Costs Research and development (“R&D”) costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred. Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Share-based Compensation The Company recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.” Income Taxes The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See Note 5, “Income Taxes” for additional information. Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased by employees under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. The following table shows the computation of basic and diluted earnings per share for 2016 , 2015 and 2014 (net income in millions and shares in thousands): 2016 2015 2014 Numerator: Net income $ 45,687 $ 53,394 $ 39,510 Denominator: Weighted-average shares outstanding 5,470,820 5,753,421 6,085,572 Effect of dilutive securities 29,461 39,648 37,091 Weighted-average diluted shares 5,500,281 5,793,069 6,122,663 Basic earnings per share $ 8.35 $ 9.28 $ 6.49 Diluted earnings per share $ 8.31 $ 9.22 $ 6.45 Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share. Financial Instruments Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method. Derivative Financial Instruments The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period. For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period. Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period. Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ abilities to pay. Inventories Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 24, 2016 and September 26, 2015 , the Company’s inventories consist primarily of finished goods. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one to five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease terms or useful life for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years . Depreciation and amortization expense on property and equipment was $8.3 billion , $9.2 billion and $6.9 billion during 2016 , 2015 and 2014 , respectively. Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2016 , 2015 and 2014 . For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2016 and 2015 , the Company’s goodwill was primarily allocated to the Americas and Europe reporting units. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years . Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. Foreign Currency Translation and Remeasurement The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates. |
Financial Instruments
| Financial Instruments | 12 Months Ended |
| Sep. 24, 2016 | |
| Investments, All Other Investments [Abstract] | |
| Financial Instruments | Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 24, 2016 and September 26, 2015 (in millions): 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 8,601 $ — $ — $ 8,601 $ 8,601 $ — $ — Level 1: Money market funds 3,666 — — 3,666 3,666 — — Mutual funds 1,407 — (146 ) 1,261 — 1,261 — Subtotal 5,073 — (146 ) 4,927 3,666 1,261 — Level 2: U.S. Treasury securities 41,697 319 (4 ) 42,012 1,527 13,492 26,993 U.S. agency securities 7,543 16 — 7,559 2,762 2,441 2,356 Non-U.S. government securities 7,609 259 (27 ) 7,841 110 818 6,913 Certificates of deposit and time deposits 6,598 — — 6,598 1,108 3,897 1,593 Commercial paper 7,433 — — 7,433 2,468 4,965 — Corporate securities 131,166 1,409 (206 ) 132,369 242 19,599 112,528 Municipal securities 956 5 — 961 — 167 794 Mortgage- and asset-backed securities 19,134 178 (28 ) 19,284 — 31 19,253 Subtotal 222,136 2,186 (265 ) 224,057 8,217 45,410 170,430 Total $ 235,810 $ 2,186 $ (411 ) $ 237,585 $ 20,484 $ 46,671 $ 170,430 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 11,389 $ — $ — $ 11,389 $ 11,389 $ — $ — Level 1: Money market funds 1,798 — — 1,798 1,798 — — Mutual funds 1,772 — (144 ) 1,628 — 1,628 — Subtotal 3,570 — (144 ) 3,426 1,798 1,628 — Level 2: U.S. Treasury securities 34,902 181 (1 ) 35,082 — 3,498 31,584 U.S. agency securities 5,864 14 — 5,878 841 767 4,270 Non-U.S. government securities 6,356 45 (167 ) 6,234 43 135 6,056 Certificates of deposit and time deposits 4,347 — — 4,347 2,065 1,405 877 Commercial paper 6,016 — — 6,016 4,981 1,035 — Corporate securities 116,908 242 (985 ) 116,165 3 11,948 104,214 Municipal securities 947 5 — 952 — 48 904 Mortgage- and asset-backed securities 16,121 87 (31 ) 16,177 — 17 16,160 Subtotal 191,461 574 (1,184 ) 190,851 7,933 18,853 164,065 Total $ 206,420 $ 574 $ (1,328 ) $ 205,666 $ 21,120 $ 20,481 $ 164,065 The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and duration management. The maturities of the Company’s long-term marketable securities generally range from one to five years . The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of September 24, 2016 , the Company does not consider any of its investments to be other-than-temporarily impaired. Derivative Financial Instruments The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, on net investments in certain foreign subsidiaries and on certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. To help protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar and who sell in local currencies may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges. The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months . To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency-denominated debt, as economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges. The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities denominated in non-functional currencies. The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments. The Company designates these instruments as either cash flow or fair value hedges. The Company’s hedged interest rate transactions as of September 24, 2016 are expected to be recognized within 10 years . Cash Flow Hedges The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other income/(expense), net. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions. Net Investment Hedges The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net. Fair Value Hedges Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item. Non-Designated Derivatives Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The following tables show the Company’s derivative instruments at gross fair value as of September 24, 2016 and September 26, 2015 (in millions): 2016 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 518 $ 153 $ 671 Interest rate contracts $ 728 $ — $ 728 Derivative liabilities (2) : Foreign exchange contracts $ 935 $ 134 $ 1,069 Interest rate contracts $ 7 $ — $ 7 2015 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 1,442 $ 109 $ 1,551 Interest rate contracts $ 394 $ — $ 394 Derivative liabilities (2) : Foreign exchange contracts $ 905 $ 94 $ 999 Interest rate contracts $ 13 $ — $ 13 (1) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Consolidated Balance Sheets. (2) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated Balance Sheets. The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Gains/(Losses) recognized in OCI – effective portion: Cash flow hedges: Foreign exchange contracts $ 109 $ 3,592 $ 1,750 Interest rate contracts (57 ) (111 ) (15 ) Total $ 52 $ 3,481 $ 1,735 Net investment hedges: Foreign exchange contracts $ — $ 167 $ 53 Foreign currency debt (258 ) (71 ) — Total $ (258 ) $ 96 $ 53 Gains/(Losses) reclassified from AOCI into net income – effective portion: Cash flow hedges: Foreign exchange contracts $ 885 $ 4,092 $ (154 ) Interest rate contracts (11 ) (17 ) (16 ) Total $ 874 $ 4,075 $ (170 ) Gains/(Losses) on derivative instruments: Fair value hedges: Interest rate contracts $ 341 $ 337 $ 39 Gains/(Losses) related to hedged items: Fair value hedges: Interest rate contracts $ (341 ) $ (337 ) $ (39 ) The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Notional Amount Credit Risk Amount Notional Amount Credit Risk Amount Instruments designated as accounting hedges: Foreign exchange contracts $ 44,678 $ 518 $ 70,054 $ 1,385 Interest rate contracts $ 24,500 $ 728 $ 18,750 $ 394 Instruments not designated as accounting hedges: Foreign exchange contracts $ 54,305 $ 153 $ 49,190 $ 109 The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency or interest rates at each respective date. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change. Although the table above reflects the notional and credit risk amounts of the Company’s derivative instruments, it does not reflect the gains or losses associated with the exposures and transactions that the instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments. The Company generally enters into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. The Company presents its derivative assets and derivative liabilities at their gross fair values in its Consolidated Balance Sheets. The net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $163 million as of September 24, 2016 and $1.0 billion as of September 26, 2015 , which were recorded as accrued expenses in the Consolidated Balance Sheets. Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other. As of September 24, 2016 and September 26, 2015 , the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $1.5 billion and $2.2 billion , respectively, resulting in a net derivative asset of $160 million and a net derivative liability of $78 million , respectively. Accounts Receivable Trade Receivables The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, value-added resellers, small and mid-sized businesses and education, enterprise and government customers. The Company generally does not require collateral from its customers; however, the Company will require collateral in certain instances to limit credit risk. In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure. These credit-financing arrangements are directly between the third-party financing company and the end customer. As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements. As of September 24, 2016 and September 26, 2015 , the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10% and 12% , respectively. The Company’s cellular network carriers accounted for 63% and 71% of trade receivables as of September 24, 2016 and September 26, 2015 , respectively. Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture sub-assemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. Vendor non-trade receivables from two of the Company’s vendors accounted for 47% and 21% of total vendor non-trade receivables as of September 24, 2016 and three of the Company’s vendors accounted for 38% , 18% and 14% of total vendor non-trade receivables as of September 26, 2015 . |
Consolidated Financial Statemen
| Consolidated Financial Statement Details | 12 Months Ended |
| Sep. 24, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Consolidated Financial Statement Details | Consolidated Financial Statement Details The following tables show the Company’s consolidated financial statement details as of September 24, 2016 and September 26, 2015 (in millions): Property, Plant and Equipment, Net 2016 2015 Land and buildings $ 10,185 $ 6,956 Machinery, equipment and internal-use software 44,543 37,038 Leasehold improvements 6,517 5,263 Gross property, plant and equipment 61,245 49,257 Accumulated depreciation and amortization (34,235 ) (26,786 ) Total property, plant and equipment, net $ 27,010 $ 22,471 Other Non-Current Liabilities 2016 2015 Deferred tax liabilities $ 26,019 $ 24,062 Other non-current liabilities 10,055 9,365 Total other non-current liabilities $ 36,074 $ 33,427 Other Income/(Expense), Net The following table shows the detail of other income/(expense), net for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Interest and dividend income $ 3,999 $ 2,921 $ 1,795 Interest expense (1,456 ) (733 ) (384 ) Other expense, net (1,195 ) (903 ) (431 ) Total other income/(expense), net $ 1,348 $ 1,285 $ 980 |
Acquired Intangible Assets
| Acquired Intangible Assets | 12 Months Ended |
| Sep. 24, 2016 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Acquired Intangible Assets | Acquired Intangible Assets The Company’s acquired intangible assets with definite useful lives primarily consist of patents and licenses. The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived and amortizable acquired intangible assets $ 8,912 $ (5,806 ) $ 3,106 $ 8,125 $ (4,332 ) $ 3,793 Indefinite-lived and non-amortizable acquired intangible assets 100 — 100 100 — 100 Total acquired intangible assets $ 9,012 $ (5,806 ) $ 3,206 $ 8,225 $ (4,332 ) $ 3,893 Amortization expense related to acquired intangible assets was $1.5 billion , $1.3 billion and $1.1 billion in 2016 , 2015 and 2014 , respectively. As of September 24, 2016 , the remaining weighted-average amortization period for acquired intangible assets is 3.4 years . The expected annual amortization expense related to acquired intangible assets as of September 24, 2016 , is as follows (in millions): 2017 $ 1,197 2018 902 2019 449 2020 255 2021 175 Thereafter 128 Total $ 3,106 |
Income Taxes
| Income Taxes | 12 Months Ended |
| Sep. 24, 2016 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The provision for income taxes for 2016 , 2015 and 2014 , consisted of the following (in millions): 2016 2015 2014 Federal: Current $ 7,652 $ 11,730 $ 8,624 Deferred 5,043 3,408 3,183 12,695 15,138 11,807 State: Current 990 1,265 855 Deferred (138 ) (220 ) (178 ) 852 1,045 677 Foreign: Current 2,105 4,744 2,147 Deferred 33 (1,806 ) (658 ) 2,138 2,938 1,489 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 The foreign provision for income taxes is based on foreign pre-tax earnings of $41.1 billion , $47.6 billion and $33.6 billion in 2016, 2015 and 2014, respectively. The Company’s consolidated financial statements provide for any related tax liability on undistributed earnings that the Company does not intend to be indefinitely reinvested outside the U.S. Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5% . As of September 24, 2016 , U.S. income taxes have not been provided on a cumulative total of $109.8 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $35.9 billion . As of September 24, 2016 and September 26, 2015 , $216.0 billion and $186.9 billion , respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S. A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate ( 35% in 2016 , 2015 and 2014 ) to income before provision for income taxes for 2016 , 2015 and 2014 , is as follows (dollars in millions): 2016 2015 2014 Computed expected tax $ 21,480 $ 25,380 $ 18,719 State taxes, net of federal effect 553 680 469 Indefinitely invested earnings of foreign subsidiaries (5,582 ) (6,470 ) (4,744 ) Domestic production activities deduction (382 ) (426 ) (495 ) Research and development credit, net (371 ) (171 ) (88 ) Other (13 ) 128 112 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 Effective tax rate 25.6 % 26.4 % 26.1 % The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For RSUs, the Company receives an income tax benefit upon the award’s vesting equal to the tax effect of the underlying stock’s fair market value. The Company had net excess tax benefits from equity awards of $379 million , $748 million and $706 million in 2016 , 2015 and 2014 , respectively, which were reflected as increases to common stock. As of September 24, 2016 and September 26, 2015 , the significant components of the Company’s deferred tax assets and liabilities were (in millions): 2016 2015 Deferred tax assets: Accrued liabilities and other reserves $ 4,135 $ 4,205 Basis of capital assets 2,107 2,238 Deferred revenue 1,717 1,941 Deferred cost sharing 667 667 Share-based compensation 601 575 Unrealized losses — 564 Other 788 721 Total deferred tax assets, net of valuation allowance of $0 10,015 10,911 Deferred tax liabilities: Unremitted earnings of foreign subsidiaries 31,436 26,868 Other 485 303 Total deferred tax liabilities 31,921 27,171 Net deferred tax liabilities $ (21,906 ) $ (16,260 ) Deferred tax assets and liabilities reflect the effects of tax losses, credits and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Uncertain Tax Positions Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets. As of September 24, 2016 , the total amount of gross unrecognized tax benefits was $7.7 billion , of which $2.8 billion , if recognized, would affect the Company’s effective tax rate. As of September 26, 2015 , the total amount of gross unrecognized tax benefits was $6.9 billion , of which $2.5 billion , if recognized, would affect the Company’s effective tax rate. The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2016 , 2015 and 2014 , is as follows (in millions): 2016 2015 2014 Beginning Balance $ 6,900 $ 4,033 $ 2,714 Increases related to tax positions taken during a prior year 1,121 2,056 1,295 Decreases related to tax positions taken during a prior year (257 ) (345 ) (280 ) Increases related to tax positions taken during the current year 1,578 1,278 882 Decreases related to settlements with taxing authorities (1,618 ) (109 ) (574 ) Decreases related to expiration of statute of limitations — (13 ) (4 ) Ending Balance $ 7,724 $ 6,900 $ 4,033 The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of September 24, 2016 and September 26, 2015 , the total amount of gross interest and penalties accrued was $1.0 billion and $1.3 billion , respectively, which is classified as non-current liabilities in the Consolidated Balance Sheets. In connection with tax matters, the Company recognized interest and penalty expense in 2016 , 2015 and 2014 of $295 million , $709 million and $40 million , respectively. The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. During the fourth quarter of 2016, the Company reached a partial settlement with the U.S. Internal Revenue Service (the “IRS”) on its examination of the years 2010 through 2012. In connection with this settlement, the Company recognized a tax benefit in the fourth quarter of 2016 that was not significant to its consolidated financial statements. All years prior to 2013 are closed, except for the years 2010 through 2012 relating to R&D tax credits. In addition, the Company is subject to audits by state, local and foreign tax authorities. In major states and major foreign jurisdictions, the years subsequent to 2003 generally remain open and could be subject to examination by the taxing authorities. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of the resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease (whether by payment, release or a combination of both) in the next 12 months by up to $850 million . On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the "State Aid Decision"). The State Aid Decision orders Ireland to calculate and recover additional taxes from the Company for the period June 2003 through September 2014. Irish legislative changes, effective as of the beginning of 2015, eliminated the application of the tax opinions from that date forward. The Company believes the State Aid Decision to be without merit and intends to appeal to the General Court of the Court of Justice of the European Union. Ireland has also announced its intention to appeal the State Aid Decision. While the European Commission announced a recovery amount of up to €13 billion , plus interest, the actual amount of additional taxes subject to recovery is to be calculated by Ireland in accordance with the European Commission's guidance. Once the recovery amount is computed by Ireland, the Company anticipates funding it, including interest, out of foreign cash into escrow, pending conclusion of all appeals. The Company believes that any incremental Irish corporate income taxes potentially due would be creditable against U.S. taxes. |
Debt
| Debt | 12 Months Ended |
| Sep. 24, 2016 | |
| Debt Disclosure [Abstract] | |
| Debt | Debt Commercial Paper The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of September 24, 2016 and September 26, 2015 , the Company had $8.1 billion and $8.5 billion of Commercial Paper outstanding, respectively, with maturities generally less than nine months . The weighted-average interest rate of the Company’s Commercial Paper was 0.45% as of September 24, 2016 and 0.14% as of September 26, 2015 . The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2016 and 2015 (in millions): 2016 2015 Maturities less than 90 days: Proceeds from (repayments of) commercial paper, net $ (869 ) $ 5,293 Maturities greater than 90 days: Proceeds from commercial paper 3,632 3,851 Repayments of commercial paper (3,160 ) (6,953 ) Maturities greater than 90 days, net 472 (3,102 ) Total change in commercial paper, net $ (397 ) $ 2,191 Long-Term Debt As of September 24, 2016 , the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $78.4 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar-denominated and Australian dollar-denominated floating-rate notes, semi-annually for the U.S. dollar-denominated, Australian dollar-denominated, British pound-denominated and Japanese yen-denominated fixed-rate notes and annually for the euro-denominated and Swiss franc-denominated fixed-rate notes. The following table provides a summary of the Company’s term debt as of September 24, 2016 and September 26, 2015 : Maturities 2016 2015 Amount (in millions) Effective Interest Rate Amount (in millions) Effective Interest Rate 2013 debt issuance of $17.0 billion: Floating-rate notes 2018 $ 2,000 1.10% $ 3,000 0.51% - 1.10% Fixed-rate 1.000% - 3.850% notes 2018 - 2043 12,500 1.08% - 3.91% 14,000 0.51% - 3.91% 2014 debt issuance of $12.0 billion: Floating-rate notes 2017 - 2019 2,000 0.86% - 1.09% 2,000 0.37% - 0.60% Fixed-rate 1.050% - 4.450% notes 2017 - 2044 10,000 0.85% - 4.48% 10,000 0.37% - 4.48% 2015 debt issuances of $27.3 billion: Floating-rate notes 2017 - 2020 1,781 0.87% - 1.87% 1,743 0.36% - 1.87% Fixed-rate 0.350% - 4.375% notes 2017 - 2045 25,144 0.28% - 4.51% 24,958 0.28% - 4.51% Second quarter 2016 debt issuance of $15.5 billion: Floating-rate notes 2019 500 1.64 % — — Floating-rate notes 2021 500 1.95 % — — Fixed-rate 1.300% notes 2018 500 1.32 % — — Fixed-rate 1.700% notes 2019 1,000 1.71 % — — Fixed-rate 2.250% notes 2021 3,000 1.91 % — — Fixed-rate 2.850% notes 2023 1,500 2.58 % — — Fixed-rate 3.250% notes 2026 3,250 2.51 % — — Fixed-rate 4.500% notes 2036 1,250 4.54 % — — Fixed-rate 4.650% notes 2046 4,000 4.58 % — — Third quarter 2016 Australian dollar-denominated debt issuance of A$1.4 billion: Fixed-rate 2.650% notes 2020 493 1.92 % — — Fixed-rate 3.350% notes 2024 342 2.61 % — — Fixed-rate 3.600% notes 2026 247 2.84 % — — Third quarter 2016 debt issuance of $1.4 billion: Fixed-rate 4.150% notes 2046 1,377 4.15 % — — Fourth quarter 2016 debt issuance of $7.0 billion: Floating-rate notes 2019 350 0.91 % — — Fixed-rate 1.100% notes 2019 1,150 1.13 % — — Fixed-rate 1.550% notes 2021 1,250 1.40 % — — Fixed-rate 2.450% notes 2026 2,250 2.15 % — — Fixed-rate 3.850% notes 2046 2,000 3.86 % — — Total term debt 78,384 55,701 Unamortized premium/(discount) and issuance costs, net (174 ) (248 ) Hedge accounting fair value adjustments 717 376 Less: Current portion of long-term debt, net (3,500 ) (2,500 ) Total long-term debt $ 75,427 $ 53,329 To manage foreign currency risk associated with the Australian dollar-denominated notes issued in the third quarter of 2016, the Company entered into currency swaps with an aggregate notional amount of $1.0 billion , which effectively converted these notes to U.S. dollar-denominated notes. To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the second quarter of 2016 and maturing in 2021, 2023 and 2026, the Company entered into interest rate swaps with an aggregate notional amount of $5.0 billion . To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the fourth quarter of 2016 and maturing in 2021 and 2026, the Company entered into interest rate swaps with an aggregate notional amount of $1.8 billion . These interest rate swaps effectively converted a portion of the U.S. dollar-denominated fixed-rate notes to floating interest rate notes. As of September 24, 2016 , ¥195.5 billion of the Japanese yen-denominated notes was designated as a hedge of the foreign currency exposure of its net investment in a foreign operation. The foreign currency transaction gain or loss on the Japanese yen-denominated debt designated as a hedge is recorded in OCI as a part of the cumulative translation adjustment. As of September 24, 2016 , the carrying value of the debt designated as a net investment hedge was $1.9 billion . For further discussion regarding the Company’s use of derivative instruments see the Derivative Financial Instruments section of Note 2, “Financial Instruments.” The effective interest rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The Company recognized $1.4 billion , $722 million and $381 million of interest expense on its term debt for 2016 , 2015 and 2014 , respectively. The future principal payments for the Company’s Notes as of September 24, 2016 are as follows (in millions): 2017 $ 3,500 2018 6,500 2019 6,834 2020 6,454 2021 7,750 Thereafter 47,346 Total term debt $ 78,384 As of September 24, 2016 and September 26, 2015 , the fair value of the Company’s Notes, based on Level 2 inputs, was $81.7 billion and $54.9 billion , respectively. |
Shareholders' Equity
| Shareholders' Equity | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Shareholders' Equity | Shareholders’ Equity Dividends The Company declared and paid cash dividends per share during the periods presented as follows: Dividends Per Share Amount (in millions) 2016: Fourth quarter $ 0.57 $ 3,071 Third quarter 0.57 3,117 Second quarter 0.52 2,879 First quarter 0.52 2,898 Total cash dividends declared and paid $ 2.18 $ 11,965 2015: Fourth quarter $ 0.52 $ 2,950 Third quarter 0.52 2,997 Second quarter 0.47 2,734 First quarter 0.47 2,750 Total cash dividends declared and paid $ 1.98 $ 11,431 Future dividends are subject to declaration by the Board of Directors. Share Repurchase Program In April 2016, the Company’s Board of Directors increased the share repurchase authorization from $140 billion to $175 billion of the Company’s common stock, of which $133 billion had been utilized as of September 24, 2016 . The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has entered, and in the future may enter, into accelerated share repurchase arrangements (“ASRs”) with financial institutions. In exchange for up-front payments, the financial institutions deliver shares of the Company’s common stock during the purchase periods of each ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, is determined at the end of the applicable purchase period of each ASR based on the volume weighted-average price of the Company’s common stock during that period. The shares received are retired in the periods they are delivered, and the up-front payments are accounted for as a reduction to shareholders’ equity in the Company’s Consolidated Balance Sheets in the periods the payments are made. The Company reflects the ASRs as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as forward contracts indexed to its own common stock. The ASRs met all of the applicable criteria for equity classification, and therefore were not accounted for as derivative instruments. The following table shows the Company’s ASR activity and related information during the years ended September 24, 2016 and September 26, 2015 : Purchase Period End Date Number of Shares (in thousands) Average Repurchase Price Per Share ASR Amount (in millions) August 2016 ASR November 2016 22,468 (1) (1) $ 3,000 May 2016 ASR August 2016 60,452 (2) $ 99.25 $ 6,000 November 2015 ASR April 2016 29,122 $ 103.02 $ 3,000 May 2015 ASR July 2015 48,293 $ 124.24 $ 6,000 August 2014 ASR February 2015 81,525 $ 110.40 $ 9,000 January 2014 ASR December 2014 134,247 $ 89.39 $ 12,000 (1) “Number of Shares” represents those shares delivered in the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The August 2016 ASR purchase period will end in or before November 2016. (2) Includes 48.2 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2016, and 12.3 million shares delivered and retired at the end of the purchase period, which concluded in the fourth quarter of 2016. Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows: Number of Shares (in thousands) Average Repurchase Price Per Share Amount (in millions) 2016: Fourth quarter 28,579 $ 104.97 $ 3,000 Third quarter 41,238 $ 97.00 4,000 Second quarter 71,766 $ 97.54 7,000 First quarter 25,984 $ 115.45 3,000 Total open market common stock repurchases 167,567 $ 17,000 2015: Fourth quarter 121,802 $ 115.15 $ 14,026 Third quarter 31,231 $ 128.08 4,000 Second quarter 56,400 $ 124.11 7,000 First quarter 45,704 $ 109.40 5,000 Total open market common stock repurchases 255,137 $ 30,026 |
Comprehensive Income
| Comprehensive Income | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Comprehensive Income | Comprehensive Income Comprehensive income consists of two components, net income and OCI. OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges and unrealized gains and losses on marketable securities classified as available-for-sale. The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2016 and 2015 (in millions): Comprehensive Income Components Financial Statement Line Item 2016 2015 Unrealized (gains)/losses on derivative instruments: Foreign exchange contracts Revenue $ (865 ) $ (2,432 ) Cost of sales (130 ) (2,168 ) Other income/(expense), net 111 456 Interest rate contracts Other income/(expense), net 12 17 (872 ) (4,127 ) Unrealized (gains)/losses on marketable securities Other income/(expense), net 87 91 Total amounts reclassified from AOCI $ (785 ) $ (4,036 ) The following table shows the changes in AOCI by component for 2016 and 2015 (in millions): Cumulative Foreign Currency Translation Unrealized Gains/Losses on Derivative Instruments Unrealized Gains/Losses on Marketable Securities Total Balance at September 27, 2014 $ (242 ) $ 1,364 $ (40 ) $ 1,082 Other comprehensive income/(loss) before reclassifications (612 ) 3,346 (747 ) 1,987 Amounts reclassified from AOCI — (4,127 ) 91 (4,036 ) Tax effect 201 189 232 622 Other comprehensive income/(loss) (411 ) (592 ) (424 ) (1,427 ) Balance at September 26, 2015 (653 ) 772 (464 ) (345 ) Other comprehensive income/(loss) before reclassifications 67 14 2,445 2,526 Amounts reclassified from AOCI — (872 ) 87 (785 ) Tax effect 8 124 (894 ) (762 ) Other comprehensive income/(loss) 75 (734 ) 1,638 979 Balance at September 24, 2016 $ (578 ) $ 38 $ 1,174 $ 634 |
Benefit Plans
| Benefit Plans | 12 Months Ended |
| Sep. 24, 2016 | |
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
| Benefit Plans | Benefit Plans 2014 Employee Stock Plan In the second quarter of 2014, shareholders approved the 2014 Employee Stock Plan (the “2014 Plan”) and terminated the Company’s authority to grant new awards under the 2003 Employee Stock Plan (the “2003 Plan”). The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights, as well as cash bonus awards. RSUs granted under the 2014 Plan generally vest over four years , based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one -for-one basis. Each share issued with respect to RSUs granted under the 2014 Plan reduces the number of shares available for grant under the plan by two shares. RSUs cancelled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the 2014 Plan utilizing a factor of two times the number of RSUs cancelled or shares withheld. Currently, all RSUs granted under the 2014 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. Upon approval of the 2014 Plan, the Company reserved 385 million shares plus the number of shares remaining that were reserved but not issued under the 2003 Plan. Shares subject to outstanding awards under the 2003 Plan that expire, are cancelled or otherwise terminate, or are withheld to satisfy tax withholding obligations with respect to RSUs, will also be available for awards under the 2014 Plan. As of September 24, 2016 , approximately 386.4 million shares were reserved for future issuance under the 2014 Plan. 2003 Employee Stock Plan The 2003 Plan is a shareholder approved plan that provided for broad-based equity grants to employees, including executive officers. The 2003 Plan permitted the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation rights, stock purchase rights and performance-based awards. Options granted under the 2003 Plan generally expire seven to ten years after the grant date and generally become exercisable over a period of four years , based on continued employment, with either annual, semi-annual or quarterly vesting. RSUs granted under the 2003 Plan generally vest over two to four years , based on continued employment and are settled upon vesting in shares of the Company’s common stock on a one -for-one basis. All RSUs, other than RSUs held by the Chief Executive Officer, granted under the 2003 Plan have DERs. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. In the second quarter of 2014, the Company terminated the authority to grant new awards under the 2003 Plan. 1997 Director Stock Plan The 1997 Director Stock Plan (the “Director Plan”) is a shareholder approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-employee director joining the Board of Directors and automatic annual grants of RSUs at each annual meeting of shareholders, and (iii) permits the Board of Directors to prospectively change the relative mixture of stock options and RSUs for the initial and annual award grants and the methodology for determining the number of shares of the Company’s common stock subject to these grants without shareholder approval. Each share issued with respect to RSUs granted under the Director Plan reduces the number of shares available for grant under the plan by two shares. The Director Plan expires November 9, 2019 . All RSUs granted under the Director Plan are entitled to DERs. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. As of September 24, 2016 , approximately 1.1 million shares were reserved for future issuance under the Director Plan. Rule 10b5-1 Trading Plans During the three months ended September 24, 2016 , Section 16 officers Timothy D. Cook, Angela Ahrendts, Luca Maestri, Daniel Riccio, Philip Schiller and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s employee and director equity plans. Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six -month offering periods. An employee’s payroll deductions under the Purchase Plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year. As of September 24, 2016 , approximately 47.0 million shares were reserved for future issuance under the Purchase Plan. 401(k) Plan The Company’s 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ( $18,000 for calendar year 2016). The Company matches 50% to 100% of each employee’s contributions, depending on length of service, up to a maximum 6% of the employee’s eligible earnings. Restricted Stock Units A summary of the Company’s RSU activity and related information for 2016 , 2015 and 2014 , is as follows: Number of RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Aggregate Intrinsic Value (in millions) Balance at September 28, 2013 93,284 $ 62.24 RSUs granted 59,269 $ 74.54 RSUs vested (43,111 ) $ 57.29 RSUs cancelled (5,620 ) $ 68.47 Balance at September 27, 2014 103,822 $ 70.98 RSUs granted 45,587 $ 105.51 RSUs vested (41,684 ) $ 71.32 RSUs cancelled (6,258 ) $ 80.34 Balance at September 26, 2015 101,467 $ 85.77 RSUs granted 49,468 $ 109.28 RSUs vested (46,313 ) $ 84.44 RSUs cancelled (5,533 ) $ 96.48 Balance at September 24, 2016 99,089 $ 97.54 $ 11,168 The fair value as of the respective vesting dates of RSUs was $5.1 billion , $4.8 billion and $3.4 billion for 2016 , 2015 and 2014 , respectively. The majority of RSUs that vested in 2016 , 2015 and 2014 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 15.9 million , 14.1 million and 15.6 million for 2016 , 2015 and 2014 , respectively, and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to taxing authorities were $1.7 billion , $1.6 billion and $1.2 billion in 2016 , 2015 and 2014 , respectively, and are reflected as a financing activity within the Consolidated Statements of Cash Flows. These net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company. Share-based Compensation The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Cost of sales $ 769 $ 575 $ 450 Research and development 1,889 1,536 1,216 Selling, general and administrative 1,552 1,475 1,197 Total share-based compensation expense $ 4,210 $ 3,586 $ 2,863 The income tax benefit related to share-based compensation expense was $1.4 billion , $1.2 billion and $1.0 billion for 2016 , 2015 and 2014 , respectively. As of September 24, 2016 , the total unrecognized compensation cost related to outstanding stock options, RSUs and restricted stock was $7.5 billion , which the Company expects to recognize over a weighted-average period of 2.6 years . |
Commitments and Contingencies
| Commitments and Contingencies | 12 Months Ended |
| Sep. 24, 2016 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Accrued Warranty and Indemnification The following table shows changes in the Company’s accrued warranties and related costs for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Beginning accrued warranty and related costs $ 4,780 $ 4,159 $ 2,967 Cost of warranty claims (4,663 ) (4,401 ) (3,760 ) Accruals for product warranty 3,585 5,022 4,952 Ending accrued warranty and related costs $ 3,702 $ 4,780 $ 4,159 The Company generally does not indemnify end-users of its operating system and application software against legal claims that the software infringes third-party intellectual property rights. Other agreements entered into by the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights. The Company offers an iPhone Upgrade Program, which is available to customers who purchase a qualifying iPhone in the U.S., the U.K. and mainland China. The iPhone Upgrade Program provides customers the right to trade in that iPhone for a specified amount when purchasing a new iPhone, provided certain conditions are met. The Company accounts for the trade-in right as a guarantee liability and recognizes arrangement revenue net of the fair value of such right with subsequent changes to the guarantee liability recognized within revenue. The Company has entered into indemnification agreements with its directors and executive officers. Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers and to advance expenses incurred by such individuals in connection with related legal proceedings. It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim. However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations. Concentrations in the Available Sources of Supply of Materials and Product Although most components essential to the Company’s business are generally available from multiple sources, a number of components are currently obtained from single or limited sources. In addition, the Company competes for various components with other participants in the markets for mobile communication and media devices and personal computers. Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant pricing fluctuations that could materially adversely affect the Company’s financial condition and operating results. The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased. If the Company’s supply of components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the Company, the Company’s financial condition and operating results could be materially adversely affected. The Company’s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers concentrated on the production of common components instead of components customized to meet the Company’s requirements. The Company has entered into agreements for the supply of many components; however, there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all. Therefore, the Company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results. Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia. A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations. Certain of these outsourcing partners are the sole-sourced suppliers of components and manufacturers for many of the Company’s products. Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments. The Company’s manufacturing purchase obligations typically cover its requirements for periods up to 150 days . Other Off-Balance Sheet Commitments Operating Leases The Company leases various equipment and facilities, including retail space, under noncancelable operating lease arrangements. The Company does not currently utilize any other off-balance sheet financing arrangements. As of September 24, 2016 , the Company’s total future minimum lease payments under noncancelable operating leases were $7.6 billion . The Company's retail store and other facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options. Rent expense under all operating leases, including both cancelable and noncancelable leases, was $939 million , $794 million and $717 million in 2016 , 2015 and 2014 , respectively. Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 24, 2016 , are as follows (in millions): 2017 $ 929 2018 919 2019 915 2020 889 2021 836 Thereafter 3,139 Total $ 7,627 Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully adjudicated, as further discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors” and in Part I, Item 3 of this Form 10-K under the heading “Legal Proceedings.” In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of litigation is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected. Apple Inc. v. Samsung Electronics Co., Ltd., et al. On August 24, 2012, a jury returned a verdict awarding the Company $1.05 billion in its lawsuit against Samsung Electronics Co., Ltd. and affiliated parties in the United States District Court, Northern District of California, San Jose Division. On March 6, 2014, the District Court entered final judgment in favor of the Company in the amount of approximately $930 million . On May 18, 2015, the U.S. Court of Appeals for the Federal Circuit affirmed in part, and reversed in part, the decision of the District Court. As a result, the Court of Appeals ordered entry of final judgment on damages in the amount of approximately $548 million , with the District Court to determine supplemental damages and interest, as well as damages owed for products subject to the reversal in part. Samsung paid $548 million to the Company in December 2015, which was included in net sales in the Condensed Consolidated Statement of Operations. Because the case remains subject to further proceedings, the Company has not recognized any further amounts in its results of operations. On October 11, 2016, the United States Supreme Court heard arguments in Samsung’s request for appeal related to the $548 million in damages. |
Segment Information and Geograp
| Segment Information and Geographic Data | 12 Months Ended |
| Sep. 24, 2016 | |
| Segment Reporting [Abstract] | |
| Segment Information and Geographic Data | Segment Information and Geographic Data The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable operating segments. The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and those Asian countries not included in the Company’s other reportable operating segments. Although the reportable operating segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.” The Company evaluates the performance of its reportable operating segments based on net sales and operating income. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Advertising expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable operating segments. Costs excluded from segment operating income include various corporate expenses such as R&D, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes. The following table shows information by reportable operating segment for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Americas: Net sales $ 86,613 $ 93,864 $ 80,095 Operating income $ 28,172 $ 31,186 $ 26,158 Europe: Net sales $ 49,952 $ 50,337 $ 44,285 Operating income $ 15,348 $ 16,527 $ 14,434 Greater China: Net sales $ 48,492 $ 58,715 $ 31,853 Operating income $ 18,835 $ 23,002 $ 11,039 Japan: Net sales $ 16,928 $ 15,706 $ 15,314 Operating income $ 7,165 $ 7,617 $ 6,904 Rest of Asia Pacific: Net sales $ 13,654 $ 15,093 $ 11,248 Operating income $ 4,781 $ 5,518 $ 3,674 A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2016 , 2015 and 2014 is as follows (in millions): 2016 2015 2014 Segment operating income $ 74,301 $ 83,850 $ 62,209 Research and development expense (10,045 ) (8,067 ) (6,041 ) Other corporate expenses, net (4,232 ) (4,553 ) (3,665 ) Total operating income $ 60,024 $ 71,230 $ 52,503 The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2016, 2015 and 2014 . There was no single customer that accounted for more than 10% of net sales in 2016, 2015 or 2014 . Net sales for 2016 , 2015 and 2014 and long-lived assets as of September 24, 2016 and September 26, 2015 are as follows (in millions): 2016 2015 2014 Net sales: U.S. $ 75,667 $ 81,732 $ 68,909 China (1) 46,349 56,547 30,638 Other countries 93,623 95,436 83,248 Total net sales $ 215,639 $ 233,715 $ 182,795 2016 2015 Long-lived assets: U.S. $ 16,364 $ 12,022 China (1) 7,807 8,722 Other countries 2,839 3,040 Total long-lived assets $ 27,010 $ 23,784 (1) China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure. Net sales by product for 2016 , 2015 and 2014 are as follows (in millions): 2016 2015 2014 iPhone (1) $ 136,700 $ 155,041 $ 101,991 iPad (1) 20,628 23,227 30,283 Mac (1) 22,831 25,471 24,079 Services (2) 24,348 19,909 18,063 Other Products (1)(3) 11,132 10,067 8,379 Total net sales $ 215,639 $ 233,715 $ 182,795 (1) Includes deferrals and amortization of related software upgrade rights and non-software services. (2) Includes revenue from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, Apple Pay, licensing and other services. (3) Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories. |
Selected Quarterly Financial In
| Selected Quarterly Financial Information (Unaudited) | 12 Months Ended |
| Sep. 24, 2016 | |
| Quarterly Financial Information Disclosure [Abstract] | |
| Selected Quarterly Financial Information (Unaudited) | Selected Quarterly Financial Information (Unaudited) The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2016 and 2015 (in millions, except per share amounts): Fourth Quarter Third Quarter Second Quarter First Quarter 2016: Net sales $ 46,852 $ 42,358 $ 50,557 $ 75,872 Gross margin $ 17,813 $ 16,106 $ 19,921 $ 30,423 Net income $ 9,014 $ 7,796 $ 10,516 $ 18,361 Earnings per share (1) : Basic $ 1.68 $ 1.43 $ 1.91 $ 3.30 Diluted $ 1.67 $ 1.42 $ 1.90 $ 3.28 Fourth Quarter Third Quarter Second Quarter First Quarter 2015: Net sales $ 51,501 $ 49,605 $ 58,010 $ 74,599 Gross margin $ 20,548 $ 19,681 $ 23,656 $ 29,741 Net income $ 11,124 $ 10,677 $ 13,569 $ 18,024 Earnings per share (1) : Basic $ 1.97 $ 1.86 $ 2.34 $ 3.08 Diluted $ 1.96 $ 1.85 $ 2.33 $ 3.06 (1) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share. |
Summary of Significant Accoun21
| Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
| Sep. 24, 2016 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation and Preparation | Basis of Presentation and Preparation The accompanying consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period’s presentation. |
| Fiscal Period | The Company’s fiscal year is the 52 or 53 -week period that ends on the last Saturday of September. The Company’s fiscal years 2016 , 2015 and 2014 ended on September 24, 2016 , September 26, 2015 and September 27, 2014 , respectively, and each spanned 52 weeks. An additional week is included in the first fiscal quarter approximately every five or six years to realign fiscal quarters with calendar quarters, which will next occur in the first quarter of the Company's fiscal year ending September 30, 2017. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. |
| New Accounting Pronouncements | During 2016, the Company adopted an accounting standard that simplified the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The Company has adopted this accounting standard prospectively; accordingly, the prior period amounts in the Company’s Consolidated Balance Sheets within this Annual Report on Form 10-K were not adjusted to conform to the new accounting standard. The adoption of this accounting standard was not material to the Company’s consolidated financial statements. |
| Revenue Recognition | Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware. For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations. The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and iBooks Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. Revenue from AppleCare service and support contracts is deferred and recognized over the service coverage periods. AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty. The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Revenue Recognition for Arrangements with Multiple Deliverables For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. For multi-element arrangements accounted for in accordance with industry specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered. For sales of qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential to the functionality of the hardware device delivered at the time of sale. The second deliverable is the embedded right included with qualifying devices to receive on a when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. The third deliverable is the non-software services to be provided to qualifying devices. The Company allocates revenue between these deliverables using the relative selling price method. Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred. The Company’s process for determining its ESP for deliverables without VSOE or TPE considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, product specific business objectives, length of time a particular version of a device has been available, estimated cost to provide the non-software services and the relative ESP of the upgrade rights and non-software services as compared to the total selling price of the product. |
| Shipping Costs | Shipping Costs Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales. |
| Warranty Costs | Warranty Costs The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates. |
| Software Development Costs | Software Development Costs Research and development (“R&D”) costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred. |
| Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. |
| Share-based Compensation | Share-based Compensation The Company recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.” |
| Income Taxes | Income Taxes The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See Note 5, “Income Taxes” for additional information. |
| Earnings Per Share | Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share. Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased by employees under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. |
| Cash Equivalents and Marketable Securities | Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method. |
| Derivative Financial Instruments | Derivative Financial Instruments The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period. For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period. Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period. Derivative Financial Instruments The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, on net investments in certain foreign subsidiaries and on certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. To help protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar and who sell in local currencies may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges. The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months . To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency-denominated debt, as economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges. The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities denominated in non-functional currencies. The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments. The Company designates these instruments as either cash flow or fair value hedges. The Company’s hedged interest rate transactions as of September 24, 2016 are expected to be recognized within 10 years . Cash Flow Hedges The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other income/(expense), net. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions. Net Investment Hedges The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net. Fair Value Hedges Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item. Non-Designated Derivatives Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. |
| Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ abilities to pay. |
| Inventories | Inventories Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 24, 2016 and September 26, 2015 , the Company’s inventories consist primarily of finished goods. |
| Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one to five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease terms or useful life for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years . |
| Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets | Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2016 , 2015 and 2014 . For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2016 and 2015 , the Company’s goodwill was primarily allocated to the Americas and Europe reporting units. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years . |
| Fair Value Measurements | Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. |
| Foreign Currency Translation and Remeasurement | Foreign Currency Translation and Remeasurement The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates. |
Summary of Significant Accoun22
| Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Accounting Policies [Abstract] | |
| Computation of Basic and Diluted Earnings Per Share | The following table shows the computation of basic and diluted earnings per share for 2016 , 2015 and 2014 (net income in millions and shares in thousands): 2016 2015 2014 Numerator: Net income $ 45,687 $ 53,394 $ 39,510 Denominator: Weighted-average shares outstanding 5,470,820 5,753,421 6,085,572 Effect of dilutive securities 29,461 39,648 37,091 Weighted-average diluted shares 5,500,281 5,793,069 6,122,663 Basic earnings per share $ 8.35 $ 9.28 $ 6.49 Diluted earnings per share $ 8.31 $ 9.22 $ 6.45 |
Financial Instruments (Tables)
| Financial Instruments (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Investments, All Other Investments [Abstract] | |
| Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities | The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 24, 2016 and September 26, 2015 (in millions): 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 8,601 $ — $ — $ 8,601 $ 8,601 $ — $ — Level 1: Money market funds 3,666 — — 3,666 3,666 — — Mutual funds 1,407 — (146 ) 1,261 — 1,261 — Subtotal 5,073 — (146 ) 4,927 3,666 1,261 — Level 2: U.S. Treasury securities 41,697 319 (4 ) 42,012 1,527 13,492 26,993 U.S. agency securities 7,543 16 — 7,559 2,762 2,441 2,356 Non-U.S. government securities 7,609 259 (27 ) 7,841 110 818 6,913 Certificates of deposit and time deposits 6,598 — — 6,598 1,108 3,897 1,593 Commercial paper 7,433 — — 7,433 2,468 4,965 — Corporate securities 131,166 1,409 (206 ) 132,369 242 19,599 112,528 Municipal securities 956 5 — 961 — 167 794 Mortgage- and asset-backed securities 19,134 178 (28 ) 19,284 — 31 19,253 Subtotal 222,136 2,186 (265 ) 224,057 8,217 45,410 170,430 Total $ 235,810 $ 2,186 $ (411 ) $ 237,585 $ 20,484 $ 46,671 $ 170,430 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 11,389 $ — $ — $ 11,389 $ 11,389 $ — $ — Level 1: Money market funds 1,798 — — 1,798 1,798 — — Mutual funds 1,772 — (144 ) 1,628 — 1,628 — Subtotal 3,570 — (144 ) 3,426 1,798 1,628 — Level 2: U.S. Treasury securities 34,902 181 (1 ) 35,082 — 3,498 31,584 U.S. agency securities 5,864 14 — 5,878 841 767 4,270 Non-U.S. government securities 6,356 45 (167 ) 6,234 43 135 6,056 Certificates of deposit and time deposits 4,347 — — 4,347 2,065 1,405 877 Commercial paper 6,016 — — 6,016 4,981 1,035 — Corporate securities 116,908 242 (985 ) 116,165 3 11,948 104,214 Municipal securities 947 5 — 952 — 48 904 Mortgage- and asset-backed securities 16,121 87 (31 ) 16,177 — 17 16,160 Subtotal 191,461 574 (1,184 ) 190,851 7,933 18,853 164,065 Total $ 206,420 $ 574 $ (1,328 ) $ 205,666 $ 21,120 $ 20,481 $ 164,065 |
| Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities | The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 24, 2016 and September 26, 2015 (in millions): 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 8,601 $ — $ — $ 8,601 $ 8,601 $ — $ — Level 1: Money market funds 3,666 — — 3,666 3,666 — — Mutual funds 1,407 — (146 ) 1,261 — 1,261 — Subtotal 5,073 — (146 ) 4,927 3,666 1,261 — Level 2: U.S. Treasury securities 41,697 319 (4 ) 42,012 1,527 13,492 26,993 U.S. agency securities 7,543 16 — 7,559 2,762 2,441 2,356 Non-U.S. government securities 7,609 259 (27 ) 7,841 110 818 6,913 Certificates of deposit and time deposits 6,598 — — 6,598 1,108 3,897 1,593 Commercial paper 7,433 — — 7,433 2,468 4,965 — Corporate securities 131,166 1,409 (206 ) 132,369 242 19,599 112,528 Municipal securities 956 5 — 961 — 167 794 Mortgage- and asset-backed securities 19,134 178 (28 ) 19,284 — 31 19,253 Subtotal 222,136 2,186 (265 ) 224,057 8,217 45,410 170,430 Total $ 235,810 $ 2,186 $ (411 ) $ 237,585 $ 20,484 $ 46,671 $ 170,430 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Long-Term Marketable Securities Cash $ 11,389 $ — $ — $ 11,389 $ 11,389 $ — $ — Level 1: Money market funds 1,798 — — 1,798 1,798 — — Mutual funds 1,772 — (144 ) 1,628 — 1,628 — Subtotal 3,570 — (144 ) 3,426 1,798 1,628 — Level 2: U.S. Treasury securities 34,902 181 (1 ) 35,082 — 3,498 31,584 U.S. agency securities 5,864 14 — 5,878 841 767 4,270 Non-U.S. government securities 6,356 45 (167 ) 6,234 43 135 6,056 Certificates of deposit and time deposits 4,347 — — 4,347 2,065 1,405 877 Commercial paper 6,016 — — 6,016 4,981 1,035 — Corporate securities 116,908 242 (985 ) 116,165 3 11,948 104,214 Municipal securities 947 5 — 952 — 48 904 Mortgage- and asset-backed securities 16,121 87 (31 ) 16,177 — 17 16,160 Subtotal 191,461 574 (1,184 ) 190,851 7,933 18,853 164,065 Total $ 206,420 $ 574 $ (1,328 ) $ 205,666 $ 21,120 $ 20,481 $ 164,065 |
| Derivative Instruments at Gross Fair Value | The following tables show the Company’s derivative instruments at gross fair value as of September 24, 2016 and September 26, 2015 (in millions): 2016 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 518 $ 153 $ 671 Interest rate contracts $ 728 $ — $ 728 Derivative liabilities (2) : Foreign exchange contracts $ 935 $ 134 $ 1,069 Interest rate contracts $ 7 $ — $ 7 2015 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative assets (1) : Foreign exchange contracts $ 1,442 $ 109 $ 1,551 Interest rate contracts $ 394 $ — $ 394 Derivative liabilities (2) : Foreign exchange contracts $ 905 $ 94 $ 999 Interest rate contracts $ 13 $ — $ 13 (1) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Consolidated Balance Sheets. (2) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated Balance Sheets. |
| Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges | The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Gains/(Losses) recognized in OCI – effective portion: Cash flow hedges: Foreign exchange contracts $ 109 $ 3,592 $ 1,750 Interest rate contracts (57 ) (111 ) (15 ) Total $ 52 $ 3,481 $ 1,735 Net investment hedges: Foreign exchange contracts $ — $ 167 $ 53 Foreign currency debt (258 ) (71 ) — Total $ (258 ) $ 96 $ 53 Gains/(Losses) reclassified from AOCI into net income – effective portion: Cash flow hedges: Foreign exchange contracts $ 885 $ 4,092 $ (154 ) Interest rate contracts (11 ) (17 ) (16 ) Total $ 874 $ 4,075 $ (170 ) Gains/(Losses) on derivative instruments: Fair value hedges: Interest rate contracts $ 341 $ 337 $ 39 Gains/(Losses) related to hedged items: Fair value hedges: Interest rate contracts $ (341 ) $ (337 ) $ (39 ) |
| Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments | The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Notional Amount Credit Risk Amount Notional Amount Credit Risk Amount Instruments designated as accounting hedges: Foreign exchange contracts $ 44,678 $ 518 $ 70,054 $ 1,385 Interest rate contracts $ 24,500 $ 728 $ 18,750 $ 394 Instruments not designated as accounting hedges: Foreign exchange contracts $ 54,305 $ 153 $ 49,190 $ 109 |
Consolidated Financial Statem24
| Consolidated Financial Statement Details (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Property, Plant and Equipment, Net | Property, Plant and Equipment, Net 2016 2015 Land and buildings $ 10,185 $ 6,956 Machinery, equipment and internal-use software 44,543 37,038 Leasehold improvements 6,517 5,263 Gross property, plant and equipment 61,245 49,257 Accumulated depreciation and amortization (34,235 ) (26,786 ) Total property, plant and equipment, net $ 27,010 $ 22,471 |
| Other Non-Current Liabilities | Other Non-Current Liabilities 2016 2015 Deferred tax liabilities $ 26,019 $ 24,062 Other non-current liabilities 10,055 9,365 Total other non-current liabilities $ 36,074 $ 33,427 |
| Other Income/(Expense), Net | Other Income/(Expense), Net The following table shows the detail of other income/(expense), net for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Interest and dividend income $ 3,999 $ 2,921 $ 1,795 Interest expense (1,456 ) (733 ) (384 ) Other expense, net (1,195 ) (903 ) (431 ) Total other income/(expense), net $ 1,348 $ 1,285 $ 980 |
Acquired Intangible Assets (Tab
| Acquired Intangible Assets (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Components of Gross and Net Intangible Asset Balances | The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived and amortizable acquired intangible assets $ 8,912 $ (5,806 ) $ 3,106 $ 8,125 $ (4,332 ) $ 3,793 Indefinite-lived and non-amortizable acquired intangible assets 100 — 100 100 — 100 Total acquired intangible assets $ 9,012 $ (5,806 ) $ 3,206 $ 8,225 $ (4,332 ) $ 3,893 |
| Components of Gross and Net Intangible Asset Balances | The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): 2016 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived and amortizable acquired intangible assets $ 8,912 $ (5,806 ) $ 3,106 $ 8,125 $ (4,332 ) $ 3,793 Indefinite-lived and non-amortizable acquired intangible assets 100 — 100 100 — 100 Total acquired intangible assets $ 9,012 $ (5,806 ) $ 3,206 $ 8,225 $ (4,332 ) $ 3,893 |
| Expected Annual Amortization Expense Related to Acquired Intangible Assets | The expected annual amortization expense related to acquired intangible assets as of September 24, 2016 , is as follows (in millions): 2017 $ 1,197 2018 902 2019 449 2020 255 2021 175 Thereafter 128 Total $ 3,106 |
Income Taxes (Tables)
| Income Taxes (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Income Tax Disclosure [Abstract] | |
| Provision for Income Taxes | The provision for income taxes for 2016 , 2015 and 2014 , consisted of the following (in millions): 2016 2015 2014 Federal: Current $ 7,652 $ 11,730 $ 8,624 Deferred 5,043 3,408 3,183 12,695 15,138 11,807 State: Current 990 1,265 855 Deferred (138 ) (220 ) (178 ) 852 1,045 677 Foreign: Current 2,105 4,744 2,147 Deferred 33 (1,806 ) (658 ) 2,138 2,938 1,489 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 |
| Reconciliation of Provision for Income Taxes | A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate ( 35% in 2016 , 2015 and 2014 ) to income before provision for income taxes for 2016 , 2015 and 2014 , is as follows (dollars in millions): 2016 2015 2014 Computed expected tax $ 21,480 $ 25,380 $ 18,719 State taxes, net of federal effect 553 680 469 Indefinitely invested earnings of foreign subsidiaries (5,582 ) (6,470 ) (4,744 ) Domestic production activities deduction (382 ) (426 ) (495 ) Research and development credit, net (371 ) (171 ) (88 ) Other (13 ) 128 112 Provision for income taxes $ 15,685 $ 19,121 $ 13,973 Effective tax rate 25.6 % 26.4 % 26.1 % |
| Significant Components of Deferred Tax Assets and Liabilities | As of September 24, 2016 and September 26, 2015 , the significant components of the Company’s deferred tax assets and liabilities were (in millions): 2016 2015 Deferred tax assets: Accrued liabilities and other reserves $ 4,135 $ 4,205 Basis of capital assets 2,107 2,238 Deferred revenue 1,717 1,941 Deferred cost sharing 667 667 Share-based compensation 601 575 Unrealized losses — 564 Other 788 721 Total deferred tax assets, net of valuation allowance of $0 10,015 10,911 Deferred tax liabilities: Unremitted earnings of foreign subsidiaries 31,436 26,868 Other 485 303 Total deferred tax liabilities 31,921 27,171 Net deferred tax liabilities $ (21,906 ) $ (16,260 ) |
| Aggregate Changes in Gross Unrecognized Tax Benefits Excluding Interest and Penalties | The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2016 , 2015 and 2014 , is as follows (in millions): 2016 2015 2014 Beginning Balance $ 6,900 $ 4,033 $ 2,714 Increases related to tax positions taken during a prior year 1,121 2,056 1,295 Decreases related to tax positions taken during a prior year (257 ) (345 ) (280 ) Increases related to tax positions taken during the current year 1,578 1,278 882 Decreases related to settlements with taxing authorities (1,618 ) (109 ) (574 ) Decreases related to expiration of statute of limitations — (13 ) (4 ) Ending Balance $ 7,724 $ 6,900 $ 4,033 |
Debt (Tables)
| Debt (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Debt Disclosure [Abstract] | |
| Summary of Cash Flows Associated With Issuance and Maturities of Commercial Paper | The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2016 and 2015 (in millions): 2016 2015 Maturities less than 90 days: Proceeds from (repayments of) commercial paper, net $ (869 ) $ 5,293 Maturities greater than 90 days: Proceeds from commercial paper 3,632 3,851 Repayments of commercial paper (3,160 ) (6,953 ) Maturities greater than 90 days, net 472 (3,102 ) Total change in commercial paper, net $ (397 ) $ 2,191 |
| Summary of Term Debt | The following table provides a summary of the Company’s term debt as of September 24, 2016 and September 26, 2015 : Maturities 2016 2015 Amount (in millions) Effective Interest Rate Amount (in millions) Effective Interest Rate 2013 debt issuance of $17.0 billion: Floating-rate notes 2018 $ 2,000 1.10% $ 3,000 0.51% - 1.10% Fixed-rate 1.000% - 3.850% notes 2018 - 2043 12,500 1.08% - 3.91% 14,000 0.51% - 3.91% 2014 debt issuance of $12.0 billion: Floating-rate notes 2017 - 2019 2,000 0.86% - 1.09% 2,000 0.37% - 0.60% Fixed-rate 1.050% - 4.450% notes 2017 - 2044 10,000 0.85% - 4.48% 10,000 0.37% - 4.48% 2015 debt issuances of $27.3 billion: Floating-rate notes 2017 - 2020 1,781 0.87% - 1.87% 1,743 0.36% - 1.87% Fixed-rate 0.350% - 4.375% notes 2017 - 2045 25,144 0.28% - 4.51% 24,958 0.28% - 4.51% Second quarter 2016 debt issuance of $15.5 billion: Floating-rate notes 2019 500 1.64 % — — Floating-rate notes 2021 500 1.95 % — — Fixed-rate 1.300% notes 2018 500 1.32 % — — Fixed-rate 1.700% notes 2019 1,000 1.71 % — — Fixed-rate 2.250% notes 2021 3,000 1.91 % — — Fixed-rate 2.850% notes 2023 1,500 2.58 % — — Fixed-rate 3.250% notes 2026 3,250 2.51 % — — Fixed-rate 4.500% notes 2036 1,250 4.54 % — — Fixed-rate 4.650% notes 2046 4,000 4.58 % — — Third quarter 2016 Australian dollar-denominated debt issuance of A$1.4 billion: Fixed-rate 2.650% notes 2020 493 1.92 % — — Fixed-rate 3.350% notes 2024 342 2.61 % — — Fixed-rate 3.600% notes 2026 247 2.84 % — — Third quarter 2016 debt issuance of $1.4 billion: Fixed-rate 4.150% notes 2046 1,377 4.15 % — — Fourth quarter 2016 debt issuance of $7.0 billion: Floating-rate notes 2019 350 0.91 % — — Fixed-rate 1.100% notes 2019 1,150 1.13 % — — Fixed-rate 1.550% notes 2021 1,250 1.40 % — — Fixed-rate 2.450% notes 2026 2,250 2.15 % — — Fixed-rate 3.850% notes 2046 2,000 3.86 % — — Total term debt 78,384 55,701 Unamortized premium/(discount) and issuance costs, net (174 ) (248 ) Hedge accounting fair value adjustments 717 376 Less: Current portion of long-term debt, net (3,500 ) (2,500 ) Total long-term debt $ 75,427 $ 53,329 |
| Future Principal Payments for Notes | The future principal payments for the Company’s Notes as of September 24, 2016 are as follows (in millions): 2017 $ 3,500 2018 6,500 2019 6,834 2020 6,454 2021 7,750 Thereafter 47,346 Total term debt $ 78,384 |
Shareholders' Equity (Tables)
| Shareholders' Equity (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Cash Dividends Declared and Paid Per Share | The Company declared and paid cash dividends per share during the periods presented as follows: Dividends Per Share Amount (in millions) 2016: Fourth quarter $ 0.57 $ 3,071 Third quarter 0.57 3,117 Second quarter 0.52 2,879 First quarter 0.52 2,898 Total cash dividends declared and paid $ 2.18 $ 11,965 2015: Fourth quarter $ 0.52 $ 2,950 Third quarter 0.52 2,997 Second quarter 0.47 2,734 First quarter 0.47 2,750 Total cash dividends declared and paid $ 1.98 $ 11,431 |
| Accelerated Share Repurchase Activity and Related Information | The following table shows the Company’s ASR activity and related information during the years ended September 24, 2016 and September 26, 2015 : Purchase Period End Date Number of Shares (in thousands) Average Repurchase Price Per Share ASR Amount (in millions) August 2016 ASR November 2016 22,468 (1) (1) $ 3,000 May 2016 ASR August 2016 60,452 (2) $ 99.25 $ 6,000 November 2015 ASR April 2016 29,122 $ 103.02 $ 3,000 May 2015 ASR July 2015 48,293 $ 124.24 $ 6,000 August 2014 ASR February 2015 81,525 $ 110.40 $ 9,000 January 2014 ASR December 2014 134,247 $ 89.39 $ 12,000 (1) “Number of Shares” represents those shares delivered in the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The August 2016 ASR purchase period will end in or before November 2016. (2) Includes 48.2 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2016, and 12.3 million shares delivered and retired at the end of the purchase period, which concluded in the fourth quarter of 2016. |
| Repurchases of Common Shares in Open Market | Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows: Number of Shares (in thousands) Average Repurchase Price Per Share Amount (in millions) 2016: Fourth quarter 28,579 $ 104.97 $ 3,000 Third quarter 41,238 $ 97.00 4,000 Second quarter 71,766 $ 97.54 7,000 First quarter 25,984 $ 115.45 3,000 Total open market common stock repurchases 167,567 $ 17,000 2015: Fourth quarter 121,802 $ 115.15 $ 14,026 Third quarter 31,231 $ 128.08 4,000 Second quarter 56,400 $ 124.11 7,000 First quarter 45,704 $ 109.40 5,000 Total open market common stock repurchases 255,137 $ 30,026 |
Comprehensive Income (Tables)
| Comprehensive Income (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Equity [Abstract] | |
| Pre-tax Amounts Reclassified from AOCI into Consolidated Statements of Operations | The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2016 and 2015 (in millions): Comprehensive Income Components Financial Statement Line Item 2016 2015 Unrealized (gains)/losses on derivative instruments: Foreign exchange contracts Revenue $ (865 ) $ (2,432 ) Cost of sales (130 ) (2,168 ) Other income/(expense), net 111 456 Interest rate contracts Other income/(expense), net 12 17 (872 ) (4,127 ) Unrealized (gains)/losses on marketable securities Other income/(expense), net 87 91 Total amounts reclassified from AOCI $ (785 ) $ (4,036 ) |
| Change in Accumulated Other Comprehensive Income by Component | The following table shows the changes in AOCI by component for 2016 and 2015 (in millions): Cumulative Foreign Currency Translation Unrealized Gains/Losses on Derivative Instruments Unrealized Gains/Losses on Marketable Securities Total Balance at September 27, 2014 $ (242 ) $ 1,364 $ (40 ) $ 1,082 Other comprehensive income/(loss) before reclassifications (612 ) 3,346 (747 ) 1,987 Amounts reclassified from AOCI — (4,127 ) 91 (4,036 ) Tax effect 201 189 232 622 Other comprehensive income/(loss) (411 ) (592 ) (424 ) (1,427 ) Balance at September 26, 2015 (653 ) 772 (464 ) (345 ) Other comprehensive income/(loss) before reclassifications 67 14 2,445 2,526 Amounts reclassified from AOCI — (872 ) 87 (785 ) Tax effect 8 124 (894 ) (762 ) Other comprehensive income/(loss) 75 (734 ) 1,638 979 Balance at September 24, 2016 $ (578 ) $ 38 $ 1,174 $ 634 |
Benefit Plans (Tables)
| Benefit Plans (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
| Restricted Stock Activity | A summary of the Company’s RSU activity and related information for 2016 , 2015 and 2014 , is as follows: Number of RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Aggregate Intrinsic Value (in millions) Balance at September 28, 2013 93,284 $ 62.24 RSUs granted 59,269 $ 74.54 RSUs vested (43,111 ) $ 57.29 RSUs cancelled (5,620 ) $ 68.47 Balance at September 27, 2014 103,822 $ 70.98 RSUs granted 45,587 $ 105.51 RSUs vested (41,684 ) $ 71.32 RSUs cancelled (6,258 ) $ 80.34 Balance at September 26, 2015 101,467 $ 85.77 RSUs granted 49,468 $ 109.28 RSUs vested (46,313 ) $ 84.44 RSUs cancelled (5,533 ) $ 96.48 Balance at September 24, 2016 99,089 $ 97.54 $ 11,168 |
| Summary of Share-Based Compensation Expense | The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Cost of sales $ 769 $ 575 $ 450 Research and development 1,889 1,536 1,216 Selling, general and administrative 1,552 1,475 1,197 Total share-based compensation expense $ 4,210 $ 3,586 $ 2,863 |
Commitments and Contingencies (
| Commitments and Contingencies (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Changes in Accrued Warranties and Related Costs | The following table shows changes in the Company’s accrued warranties and related costs for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Beginning accrued warranty and related costs $ 4,780 $ 4,159 $ 2,967 Cost of warranty claims (4,663 ) (4,401 ) (3,760 ) Accruals for product warranty 3,585 5,022 4,952 Ending accrued warranty and related costs $ 3,702 $ 4,780 $ 4,159 |
| Future Minimum Lease Payments under Noncancelable Operating Leases | Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 24, 2016 , are as follows (in millions): 2017 $ 929 2018 919 2019 915 2020 889 2021 836 Thereafter 3,139 Total $ 7,627 |
Segment Information and Geogr32
| Segment Information and Geographic Data (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Segment Reporting [Abstract] | |
| Summary Information by Operating Segment | The following table shows information by reportable operating segment for 2016 , 2015 and 2014 (in millions): 2016 2015 2014 Americas: Net sales $ 86,613 $ 93,864 $ 80,095 Operating income $ 28,172 $ 31,186 $ 26,158 Europe: Net sales $ 49,952 $ 50,337 $ 44,285 Operating income $ 15,348 $ 16,527 $ 14,434 Greater China: Net sales $ 48,492 $ 58,715 $ 31,853 Operating income $ 18,835 $ 23,002 $ 11,039 Japan: Net sales $ 16,928 $ 15,706 $ 15,314 Operating income $ 7,165 $ 7,617 $ 6,904 Rest of Asia Pacific: Net sales $ 13,654 $ 15,093 $ 11,248 Operating income $ 4,781 $ 5,518 $ 3,674 |
| Reconciliation of Segment Operating Income to Consolidated Statements of Operations | A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2016 , 2015 and 2014 is as follows (in millions): 2016 2015 2014 Segment operating income $ 74,301 $ 83,850 $ 62,209 Research and development expense (10,045 ) (8,067 ) (6,041 ) Other corporate expenses, net (4,232 ) (4,553 ) (3,665 ) Total operating income $ 60,024 $ 71,230 $ 52,503 |
| Net Sales and Long-lived Assets | Net sales for 2016 , 2015 and 2014 and long-lived assets as of September 24, 2016 and September 26, 2015 are as follows (in millions): 2016 2015 2014 Net sales: U.S. $ 75,667 $ 81,732 $ 68,909 China (1) 46,349 56,547 30,638 Other countries 93,623 95,436 83,248 Total net sales $ 215,639 $ 233,715 $ 182,795 2016 2015 Long-lived assets: U.S. $ 16,364 $ 12,022 China (1) 7,807 8,722 Other countries 2,839 3,040 Total long-lived assets $ 27,010 $ 23,784 (1) China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure. |
| Net Sales by Product | Net sales by product for 2016 , 2015 and 2014 are as follows (in millions): 2016 2015 2014 iPhone (1) $ 136,700 $ 155,041 $ 101,991 iPad (1) 20,628 23,227 30,283 Mac (1) 22,831 25,471 24,079 Services (2) 24,348 19,909 18,063 Other Products (1)(3) 11,132 10,067 8,379 Total net sales $ 215,639 $ 233,715 $ 182,795 (1) Includes deferrals and amortization of related software upgrade rights and non-software services. (2) Includes revenue from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, Apple Pay, licensing and other services. (3) Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories. |
Selected Quarterly Financial 33
| Selected Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
| Sep. 24, 2016 | |
| Quarterly Financial Information Disclosure [Abstract] | |
| Summary of Quarterly Financial Information | The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2016 and 2015 (in millions, except per share amounts): Fourth Quarter Third Quarter Second Quarter First Quarter 2016: Net sales $ 46,852 $ 42,358 $ 50,557 $ 75,872 Gross margin $ 17,813 $ 16,106 $ 19,921 $ 30,423 Net income $ 9,014 $ 7,796 $ 10,516 $ 18,361 Earnings per share (1) : Basic $ 1.68 $ 1.43 $ 1.91 $ 3.30 Diluted $ 1.67 $ 1.42 $ 1.90 $ 3.28 Fourth Quarter Third Quarter Second Quarter First Quarter 2015: Net sales $ 51,501 $ 49,605 $ 58,010 $ 74,599 Gross margin $ 20,548 $ 19,681 $ 23,656 $ 29,741 Net income $ 11,124 $ 10,677 $ 13,569 $ 18,024 Earnings per share (1) : Basic $ 1.97 $ 1.86 $ 2.34 $ 3.08 Diluted $ 1.96 $ 1.85 $ 2.33 $ 3.06 (1) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share. |
Summary of Significant Accoun34
| Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
| Sep. 24, 2016USD ($)Item | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | |
| Significant Accounting Policies [Line Items] | |||
| Deliverable in arrangements | Item | 3 | ||
| Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage | 50.00% | 50.00% | |
| Depreciation and amortization expense | $ 8,300,000,000 | $ 9,200,000,000 | $ 6,900,000,000 |
| Goodwill impairment charges | 0 | 0 | 0 |
| Indefinite lived intangible asset impairment charges | $ 0 | $ 0 | $ 0 |
| Minimum | |||
| Significant Accounting Policies [Line Items] | |||
| Amortized acquired intangible assets with definite lives useful period (in years) | 3 years | ||
| Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Amortized acquired intangible assets with definite lives useful period (in years) | 7 years | ||
| Building | Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 30 years | ||
| Machinery and Equipment | Minimum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 1 year | ||
| Machinery and Equipment | Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 5 years | ||
| Internal-Use Software | Minimum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 3 years | ||
| Internal-Use Software | Maximum | |||
| Significant Accounting Policies [Line Items] | |||
| Estimated useful lives of assets (Years) | 5 years |
Summary of Significant Accoun35
| Summary of Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Numerator: | |||||||||||
| Net income | $ 9,014 | $ 7,796 | $ 10,516 | $ 18,361 | $ 11,124 | $ 10,677 | $ 13,569 | $ 18,024 | $ 45,687 | $ 53,394 | $ 39,510 |
| Denominator: | |||||||||||
| Weighted-average shares outstanding (in shares) | 5,470,820 | 5,753,421 | 6,085,572 | ||||||||
| Effect of dilutive securities (in shares) | 29,461 | 39,648 | 37,091 | ||||||||
| Weighted-average diluted shares (in shares) | 5,500,281 | 5,793,069 | 6,122,663 | ||||||||
| Basic earnings per share (in dollars per share) | $ 1.68 | $ 1.43 | $ 1.91 | $ 3.30 | $ 1.97 | $ 1.86 | $ 2.34 | $ 3.08 | $ 8.35 | $ 9.28 | $ 6.49 |
| Diluted earnings per share (in dollars per share) | $ 1.67 | $ 1.42 | $ 1.90 | $ 3.28 | $ 1.96 | $ 1.85 | $ 2.33 | $ 3.06 | $ 8.31 | $ 9.22 | $ 6.45 |
Financial Instruments - Cash an
| Financial Instruments - Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | Sep. 28, 2013 |
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | $ 235,810 | $ 206,420 | ||
| Unrealized Gains | 2,186 | 574 | ||
| Unrealized Losses | (411) | (1,328) | ||
| Fair Value | 237,585 | 205,666 | ||
| Cash and cash equivalents | 20,484 | 21,120 | $ 13,844 | $ 14,259 |
| Short-term marketable securities | 46,671 | 20,481 | ||
| Long-term marketable securities | 170,430 | 164,065 | ||
| Cash | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 8,601 | 11,389 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 8,601 | 11,389 | ||
| Cash and cash equivalents | 8,601 | 11,389 | ||
| Short-term marketable securities | 0 | 0 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 1 | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 5,073 | 3,570 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | (146) | (144) | ||
| Fair Value | 4,927 | 3,426 | ||
| Cash and cash equivalents | 3,666 | 1,798 | ||
| Short-term marketable securities | 1,261 | 1,628 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 1 | Money market funds | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 3,666 | 1,798 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 3,666 | 1,798 | ||
| Cash and cash equivalents | 3,666 | 1,798 | ||
| Short-term marketable securities | 0 | 0 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 1 | Mutual funds | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 1,407 | 1,772 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | (146) | (144) | ||
| Fair Value | 1,261 | 1,628 | ||
| Cash and cash equivalents | 0 | 0 | ||
| Short-term marketable securities | 1,261 | 1,628 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 2 | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 222,136 | 191,461 | ||
| Unrealized Gains | 2,186 | 574 | ||
| Unrealized Losses | (265) | (1,184) | ||
| Fair Value | 224,057 | 190,851 | ||
| Cash and cash equivalents | 8,217 | 7,933 | ||
| Short-term marketable securities | 45,410 | 18,853 | ||
| Long-term marketable securities | 170,430 | 164,065 | ||
| Level 2 | U.S. Treasury securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 41,697 | 34,902 | ||
| Unrealized Gains | 319 | 181 | ||
| Unrealized Losses | (4) | (1) | ||
| Fair Value | 42,012 | 35,082 | ||
| Cash and cash equivalents | 1,527 | 0 | ||
| Short-term marketable securities | 13,492 | 3,498 | ||
| Long-term marketable securities | 26,993 | 31,584 | ||
| Level 2 | U.S. agency securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 7,543 | 5,864 | ||
| Unrealized Gains | 16 | 14 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 7,559 | 5,878 | ||
| Cash and cash equivalents | 2,762 | 841 | ||
| Short-term marketable securities | 2,441 | 767 | ||
| Long-term marketable securities | 2,356 | 4,270 | ||
| Level 2 | Non-U.S. government securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 7,609 | 6,356 | ||
| Unrealized Gains | 259 | 45 | ||
| Unrealized Losses | (27) | (167) | ||
| Fair Value | 7,841 | 6,234 | ||
| Cash and cash equivalents | 110 | 43 | ||
| Short-term marketable securities | 818 | 135 | ||
| Long-term marketable securities | 6,913 | 6,056 | ||
| Level 2 | Certificates of deposit and time deposits | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 6,598 | 4,347 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 6,598 | 4,347 | ||
| Cash and cash equivalents | 1,108 | 2,065 | ||
| Short-term marketable securities | 3,897 | 1,405 | ||
| Long-term marketable securities | 1,593 | 877 | ||
| Level 2 | Commercial paper | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 7,433 | 6,016 | ||
| Unrealized Gains | 0 | 0 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 7,433 | 6,016 | ||
| Cash and cash equivalents | 2,468 | 4,981 | ||
| Short-term marketable securities | 4,965 | 1,035 | ||
| Long-term marketable securities | 0 | 0 | ||
| Level 2 | Corporate securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 131,166 | 116,908 | ||
| Unrealized Gains | 1,409 | 242 | ||
| Unrealized Losses | (206) | (985) | ||
| Fair Value | 132,369 | 116,165 | ||
| Cash and cash equivalents | 242 | 3 | ||
| Short-term marketable securities | 19,599 | 11,948 | ||
| Long-term marketable securities | 112,528 | 104,214 | ||
| Level 2 | Municipal securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 956 | 947 | ||
| Unrealized Gains | 5 | 5 | ||
| Unrealized Losses | 0 | 0 | ||
| Fair Value | 961 | 952 | ||
| Cash and cash equivalents | 0 | 0 | ||
| Short-term marketable securities | 167 | 48 | ||
| Long-term marketable securities | 794 | 904 | ||
| Level 2 | Mortgage- and asset-backed securities | ||||
| Schedule of Available-for-sale Securities [Line Items] | ||||
| Adjusted Cost | 19,134 | 16,121 | ||
| Unrealized Gains | 178 | 87 | ||
| Unrealized Losses | (28) | (31) | ||
| Fair Value | 19,284 | 16,177 | ||
| Cash and cash equivalents | 0 | 0 | ||
| Short-term marketable securities | 31 | 17 | ||
| Long-term marketable securities | $ 19,253 | $ 16,160 |
Financial Instruments - Additio
| Financial Instruments - Additional Information (Detail) $ in Millions | 12 Months Ended | |
| Sep. 24, 2016USD ($)CustomerVendor | Sep. 26, 2015USD ($)CustomerVendor | |
| Financial Instruments [Line Items] | ||
| Maturities of long-term marketable securities, minimum | 1 year | |
| Maturities of long-term marketable securities, maximum | 5 years | |
| Hedged foreign currency transactions, typical term | 12 months | |
| Hedged interest rate transactions, expected period to be recognized | 10 years | |
| Reduction to derivative assets by rights of set-off associated with derivative contracts | $ 1,500 | $ 2,200 |
| Reduction to derivative liabilities by rights of set-off associated with derivative contracts | 1,500 | 2,200 |
| Net derivative assets (liabilities) | $ 160 | $ (78) |
| Number of customers representing 10% or more of trade receivables | Customer | 1 | 1 |
| Number of vendors representing a significant portion of non-trade receivables | Vendor | 2 | 3 |
| Trade Receivables | Credit Concentration Risk | Customer One | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 10.00% | 12.00% |
| Trade Receivables | Credit Concentration Risk | Cellular Network Carriers | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 63.00% | 71.00% |
| Non-Trade Receivables | Credit Concentration Risk | Vendor One | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 47.00% | 38.00% |
| Non-Trade Receivables | Credit Concentration Risk | Vendor Two | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 21.00% | 18.00% |
| Non-Trade Receivables | Credit Concentration Risk | Vendor Three | ||
| Financial Instruments [Line Items] | ||
| Concentration risk, percentage | 14.00% | |
| Accrued Expenses | ||
| Financial Instruments [Line Items] | ||
| Net cash collateral received, derivative instruments | $ 163 | $ 1,000 |
Financial Instruments - Derivat
| Financial Instruments - Derivative Instruments at Gross Fair Value (Detail) - Level 2 - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Foreign exchange contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | $ 671 | $ 1,551 |
| Foreign exchange contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 1,069 | 999 |
| Interest rate contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 728 | 394 |
| Interest rate contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 7 | 13 |
| Derivatives Designated as Hedging Instruments | Foreign exchange contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 518 | 1,442 |
| Derivatives Designated as Hedging Instruments | Foreign exchange contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 935 | 905 |
| Derivatives Designated as Hedging Instruments | Interest rate contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 728 | 394 |
| Derivatives Designated as Hedging Instruments | Interest rate contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 7 | 13 |
| Not Designated as Hedging Instrument | Foreign exchange contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 153 | 109 |
| Not Designated as Hedging Instrument | Foreign exchange contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | 134 | 94 |
| Not Designated as Hedging Instrument | Interest rate contracts | Other Current Assets | ||
| Derivative assets: | ||
| Fair value of derivative assets | 0 | 0 |
| Not Designated as Hedging Instrument | Interest rate contracts | Accrued expenses | ||
| Derivative liabilities: | ||
| Fair value of derivative liabilities | $ 0 | $ 0 |
Financial Instruments - Pre-Tax
| Financial Instruments - Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Cash flow hedges | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | $ 52 | $ 3,481 | $ 1,735 |
| Gains/(Losses) reclassified from AOCI into net income - effective portion | 874 | 4,075 | (170) |
| Cash flow hedges | Foreign exchange contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | 109 | 3,592 | 1,750 |
| Gains/(Losses) reclassified from AOCI into net income - effective portion | 885 | 4,092 | (154) |
| Cash flow hedges | Interest rate contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | (57) | (111) | (15) |
| Gains/(Losses) reclassified from AOCI into net income - effective portion | (11) | (17) | (16) |
| Net investment hedges | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | (258) | 96 | 53 |
| Net investment hedges | Foreign exchange contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | 0 | 167 | 53 |
| Net investment hedges | Foreign currency debt | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) recognized in OCI - effective portion | (258) | (71) | 0 |
| Fair value hedges | Interest rate contracts | |||
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Gains/(Losses) on derivative instruments | 341 | 337 | 39 |
| Gains/(Losses) related to hedged items | $ (341) | $ (337) | $ (39) |
Financial Instruments - Notiona
| Financial Instruments - Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Derivatives Designated as Hedging Instruments | Foreign exchange contracts | ||
| Derivative [Line Items] | ||
| Derivative, notional amount | $ 44,678 | $ 70,054 |
| Credit risk | 518 | 1,385 |
| Derivatives Designated as Hedging Instruments | Interest rate contracts | ||
| Derivative [Line Items] | ||
| Derivative, notional amount | 24,500 | 18,750 |
| Credit risk | 728 | 394 |
| Not Designated as Hedging Instrument | Foreign exchange contracts | ||
| Derivative [Line Items] | ||
| Derivative, notional amount | 54,305 | 49,190 |
| Credit risk | $ 153 | $ 109 |
Consolidated Financial Statem41
| Consolidated Financial Statement Details - Property, Plant and Equipment, Net (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | $ 61,245 | $ 49,257 |
| Accumulated depreciation and amortization | (34,235) | (26,786) |
| Total property, plant and equipment, net | 27,010 | 22,471 |
| Land and Buildings | ||
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | 10,185 | 6,956 |
| Machinery, Equipment and Internal-Use Software | ||
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | 44,543 | 37,038 |
| Leasehold Improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Gross property, plant and equipment | $ 6,517 | $ 5,263 |
Consolidated Financial Statem42
| Consolidated Financial Statement Details - Other Non-Current Liabilities (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Other Liabilities Disclosure [Abstract] | ||
| Deferred tax liabilities | $ 26,019 | $ 24,062 |
| Other non-current liabilities | 10,055 | 9,365 |
| Total other non-current liabilities | $ 36,074 | $ 33,427 |
Consolidated Financial Statem43
| Consolidated Financial Statement Details - Other Income/(Expense), Net (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Other Income and Expenses [Abstract] | |||
| Interest and dividend income | $ 3,999 | $ 2,921 | $ 1,795 |
| Interest expense | (1,456) | (733) | (384) |
| Other expense, net | (1,195) | (903) | (431) |
| Total other income/(expense), net | $ 1,348 | $ 1,285 | $ 980 |
Acquired Intangible Assets - Co
| Acquired Intangible Assets - Components of Gross and Net Intangible Asset Balances (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Definite-lived and amortizable acquired intangible assets, gross carrying amount | $ 8,912 | $ 8,125 |
| Definite-lived and amortizable acquired intangible assets, accumulated amortization | (5,806) | (4,332) |
| Definite-lived and amortizable acquired intangible assets, net carrying amount | 3,106 | 3,793 |
| Indefinite-lived and non-amortizable acquired intangible assets | 100 | 100 |
| Total acquired intangible assets, gross carrying amount | 9,012 | 8,225 |
| Total acquired intangible assets, net carrying amount | $ 3,206 | $ 3,893 |
Acquired Intangible Assets - Ad
| Acquired Intangible Assets - Additional Information (Detail) - USD ($) $ in Billions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |||
| Amortization expense related to acquired intangible assets | $ 1.5 | $ 1.3 | $ 1.1 |
| Weighted-average amortization period for acquired intangible assets (in years) | 3 years 4 months 24 days |
Acquired Intangible Assets - Ex
| Acquired Intangible Assets - Expected Annual Amortization Expense Related to Acquired Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
| 2,017 | $ 1,197 | |
| 2,018 | 902 | |
| 2,019 | 449 | |
| 2,020 | 255 | |
| 2,021 | 175 | |
| Thereafter | 128 | |
| Definite-lived and amortizable acquired intangible assets, net carrying amount | $ 3,106 | $ 3,793 |
Provision for Income Taxes (Det
| Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Federal: | |||
| Current | $ 7,652 | $ 11,730 | $ 8,624 |
| Deferred | 5,043 | 3,408 | 3,183 |
| Federal income tax expense (benefit) | 12,695 | 15,138 | 11,807 |
| State: | |||
| Current | 990 | 1,265 | 855 |
| Deferred | (138) | (220) | (178) |
| State income tax expense (benefits) | 852 | 1,045 | 677 |
| Foreign: | |||
| Current | 2,105 | 4,744 | 2,147 |
| Deferred | 33 | (1,806) | (658) |
| Foreign income tax expense (benefit) | 2,138 | 2,938 | 1,489 |
| Provision for income taxes | $ 15,685 | $ 19,121 | $ 13,973 |
Income Taxes - Additional Infor
| Income Taxes - Additional Information (Detail) € in Billions | Aug. 30, 2016EUR (€)Subsidiary | Sep. 24, 2016USD ($) | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 28, 2013USD ($) |
| Income Tax Disclosure [Abstract] | |||||
| Foreign pretax earnings | $ 41,100,000,000 | $ 47,600,000,000 | $ 33,600,000,000 | ||
| Statutory tax rate in foreign operations | 12.50% | ||||
| Undistributed earnings of foreign subsidiaries | $ 109,800,000,000 | ||||
| Deferred tax liability related to foreign earnings that may be repatriated | 35,900,000,000 | ||||
| Cash, cash equivalents and marketable securities held by foreign subsidiaries | $ 216,000,000,000 | $ 186,900,000,000 | |||
| Reconciliation of provision for income taxes, statutory federal income tax rate | 35.00% | 35.00% | 35.00% | ||
| Tax benefits from equity awards | $ 379,000,000 | $ 748,000,000 | $ 706,000,000 | ||
| Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage | 50.00% | 50.00% | |||
| Gross unrecognized tax benefits | $ 7,724,000,000 | $ 6,900,000,000 | 4,033,000,000 | $ 2,714,000,000 | |
| Gross unrecognized tax benefits that would affect effective tax rate, if recognized | 2,800,000,000 | 2,500,000,000 | |||
| Unrecognized tax benefits, gross interest and penalties accrued | 1,000,000,000 | 1,300,000,000 | |||
| Recognized interest and penalty expense of tax matters | 295,000,000 | $ 709,000,000 | $ 40,000,000 | ||
| Reasonably possible decrease in gross unrecognized tax benefits over next 12 months, up to | $ 850,000,000 | ||||
| Unfavorable Investigation Outcome, EU State Aid Rules | |||||
| Loss Contingencies [Line Items] | |||||
| Number of subsidiaries impacted by the European Commission tax ruling | Subsidiary | 2 | ||||
| Maximum potential loss related to European Commission tax ruling | € | € 13 |
Income Taxes - Reconciliation o
| Income Taxes - Reconciliation of the Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Income Tax Disclosure [Abstract] | |||
| Computed expected tax | $ 21,480 | $ 25,380 | $ 18,719 |
| State taxes, net of federal effect | 553 | 680 | 469 |
| Indefinitely invested earnings of foreign subsidiaries | (5,582) | (6,470) | (4,744) |
| Domestic production activities deduction | (382) | (426) | (495) |
| Research and development credit, net | (371) | (171) | (88) |
| Other | (13) | 128 | 112 |
| Provision for income taxes | $ 15,685 | $ 19,121 | $ 13,973 |
| Effective tax rate | 25.60% | 26.40% | 26.10% |
Income Taxes - Significant Comp
| Income Taxes - Significant Components of the Company's Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Deferred tax assets: | ||
| Accrued liabilities and other reserves | $ 4,135 | $ 4,205 |
| Basis of capital assets | 2,107 | 2,238 |
| Deferred revenue | 1,717 | 1,941 |
| Deferred cost sharing | 667 | 667 |
| Share-based compensation | 601 | 575 |
| Unrealized losses | 0 | 564 |
| Other | 788 | 721 |
| Total deferred tax assets, net of valuation allowance of $0 | 10,015 | 10,911 |
| Deferred tax liabilities: | ||
| Unremitted earnings of foreign subsidiaries | 31,436 | 26,868 |
| Other | 485 | 303 |
| Total deferred tax liabilities | 31,921 | 27,171 |
| Net deferred tax liabilities | (21,906) | (16,260) |
| Deferred tax assets, valuation allowance | $ 0 | $ 0 |
Income Taxes - Aggregate Change
| Income Taxes - Aggregate Changes in Gross Unrecognized Tax Benefits Excluding Interest and Penalties (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
| Beginning Balance | $ 6,900 | $ 4,033 | $ 2,714 |
| Increases related to tax positions taken during a prior year | 1,121 | 2,056 | 1,295 |
| Decreases related to tax positions taken during a prior year | (257) | (345) | (280) |
| Increases related to tax positions taken during the current year | 1,578 | 1,278 | 882 |
| Decreases related to settlements with taxing authorities | (1,618) | (109) | (574) |
| Decreases related to expiration of statute of limitations | 0 | (13) | (4) |
| Ending Balance | $ 7,724 | $ 6,900 | $ 4,033 |
Debt - Additional Information (
| Debt - Additional Information (Detail) $ in Millions, ¥ in Billions | 12 Months Ended | |||||
| Sep. 24, 2016USD ($) | Sep. 26, 2015USD ($) | Sep. 27, 2014USD ($) | Sep. 24, 2016JPY (¥) | Jun. 25, 2016USD ($) | Mar. 26, 2016USD ($) | |
| Debt Instrument [Line Items] | ||||||
| Commercial paper | $ 8,105 | $ 8,499 | ||||
| Aggregate principal balance of debt | 78,384 | 55,701 | ||||
| Interest expense | $ 1,400 | $ 722 | $ 381 | |||
| Commercial paper | ||||||
| Debt Instrument [Line Items] | ||||||
| Commercial paper, weighted-average interest rate | 0.45% | 0.14% | 0.45% | |||
| Level 2 | ||||||
| Debt Instrument [Line Items] | ||||||
| Debt instrument fair value | $ 81,700 | $ 54,900 | ||||
| Currency Swaps | ||||||
| Debt Instrument [Line Items] | ||||||
| Derivative, notional amount | $ 1,000 | |||||
| Interest Rate Swap | ||||||
| Debt Instrument [Line Items] | ||||||
| Derivative, notional amount | 1,800 | $ 5,000 | ||||
| Third quarter 2015 Japanese yen-denominated debt issuance | Net investment hedges | ||||||
| Debt Instrument [Line Items] | ||||||
| Debt instrument, face amount | ¥ | ¥ 195.5 | |||||
| Debt instrument, senior notes | $ 1,900 | |||||
| Maximum | ||||||
| Debt Instrument [Line Items] | ||||||
| Commercial paper, maturity period | 9 months |
Debt - Summary of Cash Flows As
| Debt - Summary of Cash Flows Associated With Issuance and Maturities of Commercial Paper (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Maturities less than 90 days: | |||
| Proceeds from (repayments of) commercial paper, net | $ (869) | $ 5,293 | |
| Maturities greater than 90 days: | |||
| Proceeds from commercial paper | 3,632 | 3,851 | |
| Repayments of commercial paper | (3,160) | (6,953) | |
| Proceeds from (repayments of) commercial paper, net | 472 | (3,102) | |
| Total change in commercial paper, net | $ (397) | $ 2,191 | $ 6,306 |
Debt - Summary of Term Debt (De
| Debt - Summary of Term Debt (Detail) | 12 Months Ended | ||
| Sep. 24, 2016USD ($) | Sep. 26, 2015USD ($) | Sep. 24, 2016AUD | |
| Debt Instrument [Line Items] | |||
| Total term debt | $ 78,384,000,000 | $ 55,701,000,000 | |
| Unamortized premium/(discount) and issuance costs, net | (174,000,000) | (248,000,000) | |
| Hedge accounting fair value adjustments | 717,000,000 | 376,000,000 | |
| Less: Current portion of long-term debt | (3,500,000,000) | (2,500,000,000) | |
| Total long-term debt | 75,427,000,000 | 53,329,000,000 | |
| 2013 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | 17,000,000,000 | ||
| 2013 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 2,000,000,000 | $ 3,000,000,000 | |
| Debt instrument maturity year, start | 2,018 | ||
| Debt instrument maturity year, end | 2,018 | ||
| Debt instrument effective interest rate, minimum | 1.10% | 0.51% | |
| Debt instrument effective interest rate, maximum | 1.10% | 1.10% | |
| 2013 debt issuance | Fixed-rate 1.000% - 3.850% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 12,500,000,000 | $ 14,000,000,000 | |
| Debt instrument maturity year, start | 2,018 | ||
| Debt instrument maturity year, end | 2,043 | ||
| Debt instrument effective interest rate, minimum | 1.08% | 0.51% | |
| Debt instrument effective interest rate, maximum | 3.91% | 3.91% | |
| Debt instrument interest rate, minimum | 1.00% | ||
| Debt instrument interest rate, maximum | 3.85% | ||
| 2014 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 12,000,000,000 | ||
| 2014 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 2,000,000,000 | $ 2,000,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,019 | ||
| Debt instrument effective interest rate, minimum | 0.86% | 0.37% | |
| Debt instrument effective interest rate, maximum | 1.09% | 0.60% | |
| 2014 debt issuance | Fixed-rate 1.050% - 4.450% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 10,000,000,000 | $ 10,000,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,044 | ||
| Debt instrument effective interest rate, minimum | 0.85% | 0.37% | |
| Debt instrument effective interest rate, maximum | 4.48% | 4.48% | |
| Debt instrument interest rate, minimum | 1.05% | ||
| Debt instrument interest rate, maximum | 4.45% | ||
| 2015 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 27,300,000,000 | ||
| 2015 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 1,781,000,000 | $ 1,743,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,020 | ||
| Debt instrument effective interest rate, minimum | 0.87% | 0.36% | |
| Debt instrument effective interest rate, maximum | 1.87% | 1.87% | |
| 2015 debt issuance | Fixed-rate 0.350% - 4.375% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, senior notes | $ 25,144,000,000 | $ 24,958,000,000 | |
| Debt instrument maturity year, start | 2,017 | ||
| Debt instrument maturity year, end | 2,045 | ||
| Debt instrument effective interest rate, minimum | 0.28% | 0.28% | |
| Debt instrument effective interest rate, maximum | 4.51% | 4.51% | |
| Debt instrument interest rate, minimum | 0.35% | ||
| Debt instrument interest rate, maximum | 4.375% | ||
| Second quarter 2016 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 15,500,000,000 | ||
| Second quarter 2016 debt issuance | Floating Rate Notes Due 2019 | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 500,000,000 | ||
| Debt instrument effective interest rate | 1.64% | 1.64% | |
| Second quarter 2016 debt issuance | Floating Rate Notes Due 2021 | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,021 | ||
| Debt instrument, senior notes | $ 500,000,000 | ||
| Debt instrument effective interest rate | 1.95% | 1.95% | |
| Second quarter 2016 debt issuance | Fixed-rate 1.300% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,018 | ||
| Debt instrument, senior notes | $ 500,000,000 | ||
| Debt instrument effective interest rate | 1.32% | 1.32% | |
| Debt instrument interest rate | 1.30% | 1.30% | |
| Second quarter 2016 debt issuance | Fixed-rate 1.700% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 1,000,000,000 | ||
| Debt instrument effective interest rate | 1.71% | 1.71% | |
| Debt instrument interest rate | 1.70% | 1.70% | |
| Second quarter 2016 debt issuance | Fixed-rate 2.250% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,021 | ||
| Debt instrument, senior notes | $ 3,000,000,000 | ||
| Debt instrument effective interest rate | 1.91% | 1.91% | |
| Debt instrument interest rate | 2.25% | 2.25% | |
| Second quarter 2016 debt issuance | Fixed-rate 2.850% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,023 | ||
| Debt instrument, senior notes | $ 1,500,000,000 | ||
| Debt instrument effective interest rate | 2.58% | 2.58% | |
| Debt instrument interest rate | 2.85% | 2.85% | |
| Second quarter 2016 debt issuance | Fixed-rate 3.250% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,026 | ||
| Debt instrument, senior notes | $ 3,250,000,000 | ||
| Debt instrument effective interest rate | 2.51% | 2.51% | |
| Debt instrument interest rate | 3.25% | 3.25% | |
| Second quarter 2016 debt issuance | Fixed-rate 4.500% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,036 | ||
| Debt instrument, senior notes | $ 1,250,000,000 | ||
| Debt instrument effective interest rate | 4.54% | 4.54% | |
| Debt instrument interest rate | 4.50% | 4.50% | |
| Second quarter 2016 debt issuance | Fixed-rate 4.650% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,046 | ||
| Debt instrument, senior notes | $ 4,000,000,000 | ||
| Debt instrument effective interest rate | 4.58% | 4.58% | |
| Debt instrument interest rate | 4.65% | 4.65% | |
| Third quarter 2016 Australian dollar denominated debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | AUD | AUD 1,400,000,000 | ||
| Third quarter 2016 Australian dollar denominated debt issuance | Fixed-rate 2.650% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,020 | ||
| Debt instrument, senior notes | $ 493,000,000 | ||
| Debt instrument effective interest rate | 1.92% | 1.92% | |
| Debt instrument interest rate | 2.65% | 2.65% | |
| Third quarter 2016 Australian dollar denominated debt issuance | Fixed-rate 3.350% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,024 | ||
| Debt instrument, senior notes | $ 342,000,000 | ||
| Debt instrument effective interest rate | 2.61% | 2.61% | |
| Debt instrument interest rate | 3.35% | 3.35% | |
| Third quarter 2016 Australian dollar denominated debt issuance | Fixed-rate 3.600% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,026 | ||
| Debt instrument, senior notes | $ 247,000,000 | ||
| Debt instrument effective interest rate | 2.84% | 2.84% | |
| Debt instrument interest rate | 3.60% | 3.60% | |
| Third quarter 2016 debt issuance | Fixed-rate 4.150% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,046 | ||
| Debt instrument, senior notes | $ 1,377,000,000 | ||
| Debt instrument effective interest rate | 4.15% | 4.15% | |
| Debt instrument, face amount | $ 1,400,000,000 | ||
| Debt instrument interest rate | 4.15% | 4.15% | |
| Fourth quarter 2016 debt issuance | |||
| Debt Instrument [Line Items] | |||
| Debt instrument, face amount | $ 7,000,000,000 | ||
| Fourth quarter 2016 debt issuance | Floating-rate notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 350,000,000 | ||
| Debt instrument effective interest rate | 0.91% | 0.91% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 1.100% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,019 | ||
| Debt instrument, senior notes | $ 1,150,000,000 | ||
| Debt instrument effective interest rate | 1.13% | 1.13% | |
| Debt instrument interest rate | 1.10% | 1.10% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 1.550% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,021 | ||
| Debt instrument, senior notes | $ 1,250,000,000 | ||
| Debt instrument effective interest rate | 1.40% | 1.40% | |
| Debt instrument interest rate | 1.55% | 1.55% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 2.450% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,026 | ||
| Debt instrument, senior notes | $ 2,250,000,000 | ||
| Debt instrument effective interest rate | 2.15% | 2.15% | |
| Debt instrument interest rate | 2.45% | 2.45% | |
| Fourth quarter 2016 debt issuance | Fixed-rate 3.850% notes | |||
| Debt Instrument [Line Items] | |||
| Debt instrument maturity year | 2,046 | ||
| Debt instrument, senior notes | $ 2,000,000,000 | ||
| Debt instrument effective interest rate | 3.86% | 3.86% | |
| Debt instrument interest rate | 3.85% | 3.85% |
Debt - Debt Instrument Future P
| Debt - Debt Instrument Future Principal Payments (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Debt Disclosure [Abstract] | ||
| 2,017 | $ 3,500 | |
| 2,018 | 6,500 | |
| 2,019 | 6,834 | |
| 2,020 | 6,454 | |
| 2,021 | 7,750 | |
| Thereafter | 47,346 | |
| Total term debt | $ 78,384 | $ 55,701 |
Shareholders' Equity - Summary
| Shareholders' Equity - Summary of Dividends Declared and Paid (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Equity [Abstract] | |||||||||||
| Dividends per share (in dollars per share) | $ 0.57 | $ 0.57 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.47 | $ 0.47 | $ 2.18 | $ 1.98 | $ 1.82 |
| Amount | $ 3,071 | $ 3,117 | $ 2,879 | $ 2,898 | $ 2,950 | $ 2,997 | $ 2,734 | $ 2,750 | $ 11,965 | $ 11,431 |
Shareholders' Equity - Addition
| Shareholders' Equity - Additional Information (Detail) - USD ($) | Sep. 24, 2016 | Apr. 30, 2016 | Sep. 26, 2015 |
| Equity [Abstract] | |||
| Maximum amount authorized for repurchase of common stock | $ 175,000,000,000 | $ 140,000,000,000 | |
| Share repurchase program, utilized amount | $ 133,000,000,000 |
Shareholders' Equity - Accelera
| Shareholders' Equity - Accelerated Share Repurchase Activity and Related Information (Detail) - USD ($) $ / shares in Units, shares in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 24, 2016 | Jun. 25, 2016 | Jul. 31, 2015 | Aug. 31, 2016 | Apr. 30, 2016 | Feb. 28, 2015 | Dec. 31, 2014 | |
| August 2016 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2016-11 | |||||||
| Number of shares repurchased (in shares) | 22,468 | |||||||
| ASR amount | $ 3,000,000,000 | |||||||
| May 2016 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2016-08 | |||||||
| Number of shares repurchased (in shares) | 12,300 | 48,200 | 60,452 | |||||
| Average repurchase price per share (in dollars per share) | $ 99.25 | |||||||
| ASR amount | $ 6,000,000,000 | |||||||
| November 2015 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2016-04 | |||||||
| Number of shares repurchased (in shares) | 29,122 | |||||||
| Average repurchase price per share (in dollars per share) | $ 103.02 | |||||||
| ASR amount | $ 3,000,000,000 | |||||||
| May 2015 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2015-07 | |||||||
| Number of shares repurchased (in shares) | 48,293 | |||||||
| Average repurchase price per share (in dollars per share) | $ 124.24 | |||||||
| ASR amount | $ 6,000,000,000 | |||||||
| August 2014 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2015-02 | |||||||
| Number of shares repurchased (in shares) | 81,525 | |||||||
| Average repurchase price per share (in dollars per share) | $ 110.40 | |||||||
| ASR amount | $ 9,000,000,000 | |||||||
| January 2014 ASR | ||||||||
| Accelerated Share Repurchases [Line Items] | ||||||||
| Stock repurchase program completion date | 2014-12 | |||||||
| Number of shares repurchased (in shares) | 134,247 | |||||||
| Average repurchase price per share (in dollars per share) | $ 89.39 | |||||||
| ASR amount | $ 12,000,000,000 |
Shareholders' Equity - Repurcha
| Shareholders' Equity - Repurchases of Common Shares in Open Market (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Stock Repurchase Program [Line Items] | |||||||||||
| Amount | $ 29,000 | $ 36,026 | $ 45,000 | ||||||||
| Open Market Repurchases | |||||||||||
| Stock Repurchase Program [Line Items] | |||||||||||
| Number of shares repurchased (in shares) | 28,579 | 41,238 | 71,766 | 25,984 | 121,802 | 31,231 | 56,400 | 45,704 | 167,567 | 255,137 | |
| Average repurchase price per share (in dollars per share) | $ 104.97 | $ 97 | $ 97.54 | $ 115.45 | $ 115.15 | $ 128.08 | $ 124.11 | $ 109.40 | |||
| Amount | $ 3,000 | $ 4,000 | $ 7,000 | $ 3,000 | $ 14,026 | $ 4,000 | $ 7,000 | $ 5,000 | $ 17,000 | $ 30,026 |
Comprehensive Income - Pre-tax
| Comprehensive Income - Pre-tax Amounts Reclassified from AOCI into Consolidated Statements of Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Revenue | $ (46,852) | $ (42,358) | $ (50,557) | $ (75,872) | $ (51,501) | $ (49,605) | $ (58,010) | $ (74,599) | $ (215,639) | $ (233,715) | $ (182,795) |
| Cost of sales | 131,376 | 140,089 | 112,258 | ||||||||
| Other income/(expense), net | 1,348 | 1,285 | 980 | ||||||||
| Income before provision for income taxes | (61,372) | (72,515) | $ (53,483) | ||||||||
| Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Income before provision for income taxes | (785) | (4,036) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Derivative Instruments | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Income before provision for income taxes | (872) | (4,127) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Derivative Instruments | Foreign exchange contracts | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Revenue | (865) | (2,432) | |||||||||
| Cost of sales | (130) | (2,168) | |||||||||
| Other income/(expense), net | (111) | (456) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Derivative Instruments | Interest rate contracts | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Other income/(expense), net | (12) | (17) | |||||||||
| Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains/Losses on Marketable Securities | |||||||||||
| Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
| Other income/(expense), net | $ (87) | $ (91) |
Comprehensive Income - Change i
| Comprehensive Income - Change in Accumulated Other Comprehensive Income by Component (Detail) - USD ($) $ in Millions | 12 Months Ended | |
| Sep. 24, 2016 | Sep. 26, 2015 | |
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | $ 119,355 | $ 111,547 |
| Other comprehensive income/(loss) before reclassifications | 2,526 | 1,987 |
| Amounts reclassified from AOCI | (785) | (4,036) |
| Tax effect | (762) | 622 |
| Other comprehensive income/(loss) | 979 | (1,427) |
| Ending Balances | 128,249 | 119,355 |
| Cumulative Foreign Currency Translation | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | (653) | (242) |
| Other comprehensive income/(loss) before reclassifications | 67 | (612) |
| Amounts reclassified from AOCI | 0 | 0 |
| Tax effect | 8 | 201 |
| Other comprehensive income/(loss) | 75 | (411) |
| Ending Balances | (578) | (653) |
| Unrealized Gains/Losses on Derivative Instruments | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | 772 | 1,364 |
| Other comprehensive income/(loss) before reclassifications | 14 | 3,346 |
| Amounts reclassified from AOCI | (872) | (4,127) |
| Tax effect | 124 | 189 |
| Other comprehensive income/(loss) | (734) | (592) |
| Ending Balances | 38 | 772 |
| Unrealized Gains/Losses on Marketable Securities | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | (464) | (40) |
| Other comprehensive income/(loss) before reclassifications | 2,445 | (747) |
| Amounts reclassified from AOCI | 87 | 91 |
| Tax effect | (894) | 232 |
| Other comprehensive income/(loss) | 1,638 | (424) |
| Ending Balances | 1,174 | (464) |
| Accumulated Other Comprehensive Income/(Loss) | ||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
| Beginning Balances | (345) | 1,082 |
| Ending Balances | $ 634 | $ (345) |
Benefit Plans - Additional Info
| Benefit Plans - Additional Information (Detail) - USD ($) | 12 Months Ended | |||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | Mar. 29, 2014 | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Maximum portion of pre-tax earnings under Savings Plan that can be deferred by participating U.S. employees | $ 18,000 | |||
| Fair value of vested RSUs as of vesting date | $ 5,100,000,000 | $ 4,800,000,000 | $ 3,400,000,000 | |
| The total shares withheld upon vesting of RSUs (in shares) | 15,900,000 | 14,100,000 | 15,600,000 | |
| Taxes paid related to net share settlement of equity awards | $ 1,700,000,000 | $ 1,600,000,000 | $ 1,200,000,000 | |
| Income tax benefit related to share-based compensation expense | 1,400,000,000 | $ 1,200,000,000 | $ 1,000,000,000 | |
| Total unrecognized compensation cost on stock options and RSUs | $ 7,500,000,000 | |||
| Total unrecognized compensation cost on stock options and RSUs, weighted-average recognition period (in years) | 2 years 7 months 12 days | |||
| Employee Stock Purchase Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved for future issuance under Employee Benefit Plans (in shares) | 47,000,000 | |||
| Employee common stock purchases through payroll deductions, price as a percentage of fair market value | 85.00% | |||
| Employee stock purchase plan offering period | 6 months | |||
| Payroll deductions as a percentage of employee compensation, maximum | 10.00% | |||
| Minimum | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Rate of contribution to Savings Plan as a percentage of employees contribution | 50.00% | |||
| Maximum | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Rate of contribution to Savings Plan as a percentage of employees contribution | 100.00% | |||
| Rate of contribution to Savings Plan as a percentage of employees earning | 6.00% | |||
| Maximum | Employee Stock Purchase Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Employee stock purchase program authorized amount | $ 25,000 | |||
| Employee Stock Plan, 2014 Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares authorized for future issuance under stock plans (in shares) | 385,000,000 | |||
| Shares reserved for future issuance under Employee Benefit Plans (in shares) | 386,400,000 | |||
| Employee Stock Plan, 2014 Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| RSUs granted vesting period | 4 years | |||
| Number of common stock issued per RSU upon vesting | 1 | |||
| Reduction in number of shares available for grant per share issued with respect to RSUs granted | 2 | |||
| Increase in number of shares available for grant per RSU cancelled or withheld for tax withholding | 2 | |||
| Employee Stock Plan, 2003 Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Number of common stock issued per RSU upon vesting | 1 | |||
| Employee Stock Plan, 2003 Plan | Employee Stock Option | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Options granted exercisable period | 4 years | |||
| Employee Stock Plan, 2003 Plan | Minimum | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| RSUs granted vesting period | 2 years | |||
| Employee Stock Plan, 2003 Plan | Minimum | Employee Stock Option | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Expiration term of options granted under Employee Benefit Plans | 7 years | |||
| Employee Stock Plan, 2003 Plan | Maximum | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| RSUs granted vesting period | 4 years | |||
| Employee Stock Plan, 2003 Plan | Maximum | Employee Stock Option | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Expiration term of options granted under Employee Benefit Plans | 10 years | |||
| Directors Plan | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved for future issuance under Employee Benefit Plans (in shares) | 1,100,000 | |||
| Share based compensation, expiration date | Nov. 9, 2019 | |||
| Directors Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Increase in number of shares available for grant per RSU cancelled or withheld for tax withholding | 2 |
Benefit Plans - Restricted Stoc
| Benefit Plans - Restricted Stock Units Activity and Related Information (Detail) - Restricted Stock Units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Number of Restricted Stock Units | |||
| Beginning balance (in shares) | 101,467 | 103,822 | 93,284 |
| Restricted stock units granted (in shares) | 49,468 | 45,587 | 59,269 |
| Restricted stock units vested (in shares) | (46,313) | (41,684) | (43,111) |
| Restricted stock units cancelled (in shares) | (5,533) | (6,258) | (5,620) |
| Ending balance (in shares) | 99,089 | 101,467 | 103,822 |
| Weighted-Average Grant Date Fair Value Per Share | |||
| Beginning balance (in dollars per share) | $ 85.77 | $ 70.98 | $ 62.24 |
| Restricted stock units granted (in dollars per share) | 109.28 | 105.51 | 74.54 |
| Restricted stock units vested (in dollars per share) | 84.44 | 71.32 | 57.29 |
| Restricted stock units cancelled (in dollars per share) | 96.48 | 80.34 | 68.47 |
| Ending balance (in dollars per share) | $ 97.54 | $ 85.77 | $ 70.98 |
| Aggregate Intrinsic Value | |||
| Aggregate intrinsic value of Restricted stock units | $ 11,168 |
Benefit Plans - Summary of Shar
| Benefit Plans - Summary of Share-Based Compensation Expense (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | $ 4,210 | $ 3,586 | $ 2,863 |
| Cost of sales | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | 769 | 575 | 450 |
| Research and Development | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | 1,889 | 1,536 | 1,216 |
| Selling, General and Administrative | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
| Share-based compensation expense | $ 1,552 | $ 1,475 | $ 1,197 |
Commitments and Contingencies -
| Commitments and Contingencies - Changes in Accrued Warranties and Related Costs (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Movement in Standard Product Warranty Accrual [Roll Forward] | |||
| Beginning accrued warranty and related costs | $ 4,780 | $ 4,159 | $ 2,967 |
| Cost of warranty claims | (4,663) | (4,401) | (3,760) |
| Accruals for product warranty | 3,585 | 5,022 | 4,952 |
| Ending accrued warranty and related costs | $ 3,702 | $ 4,780 | $ 4,159 |
Commitments and Contingencies66
| Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||||
| Dec. 31, 2015 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | May 18, 2015 | Mar. 06, 2014 | Aug. 24, 2012 | |
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Purchase commitments maximum period | 150 days | ||||||
| Total future minimum lease payments under noncancelable operating leases | $ 7,627 | ||||||
| Rent expense under cancelable and noncancelable operating leases | $ 939 | $ 794 | $ 717 | ||||
| Samsung Electronics Co Ltd | |||||||
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Result of legal proceedings | $ 1,050 | ||||||
| Award from legal proceeding | $ 548 | $ 930 | |||||
| Samsung Electronics Co Ltd | Sales Revenue, Net | |||||||
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Proceeds from legal settlement | $ 548 | ||||||
| Maximum | Major Facility Lease | |||||||
| Commitments and Contingencies Disclosure [Line Items] | |||||||
| Term of leases | 10 years |
Commitments and Contingencies67
| Commitments and Contingencies - Future Minimum Lease Payments under Noncancelable Operating Leases (Detail) $ in Millions | Sep. 24, 2016USD ($) |
| Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
| 2,017 | $ 929 |
| 2,018 | 919 |
| 2,019 | 915 |
| 2,020 | 889 |
| 2,021 | 836 |
| Thereafter | 3,139 |
| Total | $ 7,627 |
Segment Information and Geogr68
| Segment Information and Geographic Data - Summary Information by Operating Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| Operating income | 60,024 | 71,230 | 52,503 | ||||||||
| Americas | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 86,613 | 93,864 | 80,095 | ||||||||
| Operating income | 28,172 | 31,186 | 26,158 | ||||||||
| Europe | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 49,952 | 50,337 | 44,285 | ||||||||
| Operating income | 15,348 | 16,527 | 14,434 | ||||||||
| Greater China | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 48,492 | 58,715 | 31,853 | ||||||||
| Operating income | 18,835 | 23,002 | 11,039 | ||||||||
| Japan | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 16,928 | 15,706 | 15,314 | ||||||||
| Operating income | 7,165 | 7,617 | 6,904 | ||||||||
| Rest of Asia Pacific | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 13,654 | 15,093 | 11,248 | ||||||||
| Operating income | $ 4,781 | $ 5,518 | $ 3,674 |
Segment Information and Geogr69
| Segment Information and Geographic Data - Reconciliation of Segment Operating Income to Consolidated Statements of Operations (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
| Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Operating income | $ 60,024 | $ 71,230 | $ 52,503 |
| Research and development expense | (10,045) | (8,067) | (6,041) |
| Operating income | 60,024 | 71,230 | 52,503 |
| Operating Segments | |||
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Operating income | 74,301 | 83,850 | 62,209 |
| Operating income | 74,301 | 83,850 | 62,209 |
| Segment Reconciling Items | |||
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Research and development expense | (10,045) | (8,067) | (6,041) |
| Corporate Non-Segment | |||
| Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
| Other corporate expenses, net | $ (4,232) | $ (4,553) | $ (3,665) |
Segment Information and Geogr70
| Segment Information and Geographic Data - Additional Information (Detail) | 12 Months Ended |
| Sep. 24, 2016 | |
| Segment Reporting [Abstract] | |
| Countries representing greater than 10% of net sales | The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2016, 2015 and 2014 |
| Customers representing greater than 10% of net sales | no single customer that accounted for more than 10% of net sales in 2016, 2015 or 2014 |
Segment Information and Geogr71
| Segment Information and Geographic Data - Net Sales (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| U.S. | |||||||||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | 75,667 | 81,732 | 68,909 | ||||||||
| CHINA | |||||||||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | 46,349 | 56,547 | 30,638 | ||||||||
| Other countries | |||||||||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
| Net sales | $ 93,623 | $ 95,436 | $ 83,248 |
Segment Information and Geogr72
| Segment Information and Geographic Data - Long-Lived Assets (Detail) - USD ($) $ in Millions | Sep. 24, 2016 | Sep. 26, 2015 |
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | $ 27,010 | $ 23,784 |
| U.S. | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | 16,364 | 12,022 |
| CHINA | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | 7,807 | 8,722 |
| Other countries | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Long-lived assets | $ 2,839 | $ 3,040 |
Segment Information and Geogr73
| Segment Information and Geographic Data - Net Sales by Product (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| iPhone | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 136,700 | 155,041 | 101,991 | ||||||||
| iPad | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 20,628 | 23,227 | 30,283 | ||||||||
| Mac | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 22,831 | 25,471 | 24,079 | ||||||||
| Services | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | 24,348 | 19,909 | 18,063 | ||||||||
| Other Products | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Net sales | $ 11,132 | $ 10,067 | $ 8,379 |
Selected Quarterly Financial 74
| Selected Quarterly Financial Information - Summary of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
| Sep. 24, 2016 | Jun. 25, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 27, 2014 | Sep. 24, 2016 | Sep. 26, 2015 | Sep. 27, 2014 | |
| Selected Quarterly Financial Information [Abstract] | |||||||||||
| Net sales | $ 46,852 | $ 42,358 | $ 50,557 | $ 75,872 | $ 51,501 | $ 49,605 | $ 58,010 | $ 74,599 | $ 215,639 | $ 233,715 | $ 182,795 |
| Gross margin | 17,813 | 16,106 | 19,921 | 30,423 | 20,548 | 19,681 | 23,656 | 29,741 | 84,263 | 93,626 | 70,537 |
| Net income | $ 9,014 | $ 7,796 | $ 10,516 | $ 18,361 | $ 11,124 | $ 10,677 | $ 13,569 | $ 18,024 | $ 45,687 | $ 53,394 | $ 39,510 |
| Earnings per share: | |||||||||||
| Basic (in dollars per share) | $ 1.68 | $ 1.43 | $ 1.91 | $ 3.30 | $ 1.97 | $ 1.86 | $ 2.34 | $ 3.08 | $ 8.35 | $ 9.28 | $ 6.49 |
| Diluted (in dollars per share) | $ 1.67 | $ 1.42 | $ 1.90 | $ 3.28 | $ 1.96 | $ 1.85 | $ 2.33 | $ 3.06 | $ 8.31 | $ 9.22 | $ 6.45 |
Cash Effect
Account
Effect on
Account
Effect on
Balance
Cash
Balance
Cash
Assets [opposite]
Increase
Decrease
Decrease
Increase
Liabilities [same]
Increase
Increase
Decrease
Decrease
Equity [same]
Increase
Increase
Decrease
Decrease
Contra
Accumulated depreciation
Dividends/Drawing
De
bits make cash go DOWN in Cash Flow
Credits make cash go UP
Account category
Normal
Balance
OperatingInvestingFinancing
Current AssetDebitX
Current Asset-ContraCreditX
Non-current AssetDebitX
Non-current Asset-ContraCreditX
Current LiabilityCreditX
Current Liability-ContraDebitX
Non-Current LiabilityCreditX
Non-Current Liability-ContraDebitX
EquityCreditX
Equity-ContraDebitX
Income Statement Accounts: Revenue/IncomeCreditX
Income Statement Accounts: Expense/LossesDebitX
Other Expense / Loss on sale of Non-current assetsDebitX
Other income /Gain on sale of Non-current assetsCreditX
Accumulated Amortization [Amortization Expense]CreditXAdd back to net income - Cash UP
Accumulated Depreciation [Depreciation Expense]CreditXAdd back to net income - Cash UP
Contra's act opposite from that to which they are contra
Dr./Cr,Taxes are operating whether deferred tax assets or
deferred tax liabilities whether current or non-current
Operating
= Net income:
=+ or - Non-cash income and expenses (depreciation and amortization)
=+ or - Nonrecurring income and expenses (Extraordinary or discontinued Ops)
=+ or - Gain/loss on sales of fixed assets/LT intangibles - Other income/Expense
+/- Changes in operating accounts (aka working capital accounts)
include:
• Accounts receivable
Current Assets and Current
• Inventory
liabilities for the most part
• Prepaid assets
• Other Current assets
• Accounts payable
• Accrued liabilities
• Other Current liabilities
Notice that this list includes any asset or liability shown short-term
or current section of the balance sheet
except:
• Cash and cash equivalents
we are measuring cash changes
Cash
• Marketable securities
that's a cash equivalent
• Notes payable
a note payable though short term is a form of debt, i.e., Financing
• Current Portion Long Term Debt
This is short term because it’s the part of the long term debt
due within 12 months but it's still debt [financing]
Financing
Shows increases or decreases in all sources of external
financing, such as short-term [notes payable] borrowings, commercial
paper, long-term bank debt, other long-term debt and
subordinated debt
Bank & third party borrowings
Also includes equity transactions, such as cash generated by
stock issues or other capital injections, and cash used to
repurchase stock or to pay dividends/draw
More invested capital less payments to owners
No netting:Portion of Balance Sheet
Current Portion of Long Term Debt260,000290,00030,00030,000
Accounts Payable
720,000760,00040,00040,000
Accrued Expenses
50,00040,000(10,000)(10,000)
Other Current Liabilities
23,00011,000(12,000)(12,000)
Total Current Liabilities
1,053,0001,101,000
Non-Current Liabilities
Long Term Debt
1,100,000
915,000(185,000)(185,000)
Current PortionLong
Financing: DebtLong Term DebtTerm DebtCombined
30,000$ (185,000)(155,000)$
Example A: Acquired New Debt$200,000
SO, if added $200,000AND Debt decreased($155,000)
Then you paid($355,000)
Shown both in Financing section of Cash Flow
Acquired new debt$200,000
ANDRepayment of Debt($355,000)
Example A: Paid existing Debt$260,000
SO, if paid$260,000AND Debt decreased($155,000)
Then you borrowed$105,000
Shown both in Financing section of Cash Flow
Repayment of Debt$260,000
ANDAcquired new debt$105,000
Dr/Cr Balance2xx22xx1Changeon CashRef
Common stock Par Value FC$450,000$320,000$130,000$130,000W
Additional Paid-in-Capital FC$9,670,000$7,200,000$2,470,000$2,470,000X
Treasury Stock FD($1,054,000)$0($1,054,000)($1,054,000)Y
Retained EarningsC$3,200,000$2,900,000$300,000$300,000Z
Total EquityC$12,266,000$10,420,000$1,846,000$1,846,000
Cash upWIssued/Sold Common Stock 130000 shares $1 par for $20
Cash upXIssued/Sold Common Stock 130000 shares $1 par for $20
Cash DownYBought Back 62000 shares common stock for $17
Cash down for dividendsZ
Had NI of $700,000 -O-and Issued Dividends of
$400,000 -F-;
NI [Net Income] in Operating Section of CF
Projects
| Accounting Project | ||||||
| Basic Accounting | ||||||
| 1 | History of company [ no cut & paste; 1 page maximum] | |||||
| 2 | Biography of CEO | |||||
| 3 | Biography of CFO | |||||
| 4 | Product listing [1 page maximum] | |||||
| 5 | Sales by geographic area | |||||
| 6 | Sales by Segment | |||||
| 7 | Company Code of Ethics [1 page maximum] | |||||
| 8 | Six recent news stories [ No cut & paste] summarized into a paragrapht each | |||||
| 9 | Most current: Statements of Income 2 years | |||||
| 10 | Most current: Statement of Stockholders' Equity or Retained Earnings | |||||
| 11 | Most current: Statement of Cash Flows | |||||
| 12 | Most current: Balance Sheet - 2 years | |||||
| 13 | Statement of Comprehensive Income | |||||
| 14 | Vertical analysis of Income statement | |||||
| 15 | Horizontal analysis of Balance Sheet | |||||
| 16 | Ratios: | |||||
| 15a | Net Income % | 15e | Inventory turnover | |||
| 15b | Working Capital $ | 15f | Return on Total Assets | |||
| 15c | Current ratio | 15g | Book Value per share | |||
| 15d | Accts. Receivable Turns | 15h | Debt to equity ratio | |||
| 17 | Analysts summary of Company | |||||
| 18 | Evaluatative statement: Good/ Bad inveatment & why | |||||
| Cover Page for Project: | ||||||
| Course Name: | ||||||
| "PE: ________" enter date course ends | ||||||
| Instructor Name: | ||||||
| Space | ||||||
| Space | ||||||
| Space | ||||||
| Company Names[s] | ||||||
| Prepared by: student name | ||||||
| Date submitted | ||||||
Show the Item # and item description in submission; for news stories show date and source
Companies Sp2017
| Fortune 500, June 2016 | Revenue | ||||||||||
| Financial | Rank | Company | $millions | G | K | ||||||
| Financial | 93 | 3M | $30,274 | ||||||||
| Financial | 46 | Aetna | $60,337 | ||||||||
| X | 49 | AIG | $58,327 | ||||||||
| X | 81 | Allstate | $35,653 | ||||||||
| X | 36 | Alphabet | $74,989 | ||||||||
| X | 18 | Amazon.com | $107,006 | ||||||||
| X | 67 | American Airlines Group | $40,990 | ||||||||
| X | 85 | American Express | $34,441 | ||||||||
| X | 12 | AmerisourceBergen | $135,962 | ||||||||
| X | 33 | Anthem | $79,157 | ||||||||
| X | 3 | Apple | $233,715 | ||||||||
| X | 41 | Archer Daniels Midland | $67,702 | ||||||||
| X | 10 | AT&T | $146,801 | ||||||||
| X | 26 | Bank of America Corp. | $93,056 | ||||||||
| X | 4 | Berkshire Hathaway | $210,821 | ||||||||
| X | 71 | Best Buy | $39,745 | ||||||||
| X | 24 | Boeing | $96,114 | ||||||||
| X | 21 | Cardinal Health | $102,531 | ||||||||
| X | 59 | Caterpillar | $47,011 | ||||||||
| X | 14 | Chevron | $131,118 | ||||||||
| X | 84 | CHS | $34,582 | ||||||||
| X | 79 | Cigna | $37,876 | ||||||||
| X | 54 | Cisco Systems | $49,161 | ||||||||
| X | 29 | Citigroup | $88,275 | ||||||||
| X | 62 | Coca-Cola | $44,294 | ||||||||
| X | 37 | Comcast | $74,510 | ||||||||
| X | 90 | ConocoPhillips | $30,935 | ||||||||
| X | 15 | Costco | $116,199 | ||||||||
| X | 7 | CVS Health | $153,290 | ||||||||
| X | 97 | Deere | $28,863 | ||||||||
| X | 68 | Delta Air Lines | $40,704 | ||||||||
| X | 53 | Disney | $52,465 | ||||||||
| X | 56 | Dow Chemical | $48,778 | ||||||||
| X | 101 | DuPont | $27,940 | ||||||||
| X | 65 | Energy Transfer Equity | $42,126 | ||||||||
| X | 95 | Exelon | $29,447 | ||||||||
| X | 22 | Express Scripts Holding | $101,752 | ||||||||
| X | 2 | Exxon Mobil | $246,204 | ||||||||
| X | 16 | Fannie Mae | $110,359 | ||||||||
| X | 58 | FedEx | $47,453 | ||||||||
| X | 9 | Ford Motor | $149,558 | ||||||||
| X | 43 | Freddie Mac | $63,491 | ||||||||
| X | 88 | General Dynamics | $31,469 | ||||||||
| X | 11 | General Electric | $140,389 | ||||||||
| X | 8 | General Motors | $152,356 | ||||||||
| X | 86 | Gilead Sciences | $32,639 | ||||||||
| X | 74 | Goldman Sachs Group | $39,208 | ||||||||
| X | 63 | HCA Holdings | $43,591 | ||||||||
| X | 28 | Home Depot | $88,519 | ||||||||
| X | 75 | Honeywell International | $38,581 | ||||||||
| X | 20 | HP | $103,355 | ||||||||
| X | 52 | Humana | $54,289 | ||||||||
| X | 31 | IBM | $82,461 | ||||||||
| X | 64 | Ingram Micro | $43,026 | ||||||||
| X | 51 | Intel | $55,355 | ||||||||
| X | 83 | INTL FCStone | $34,693 | ||||||||
| X | 23 | J.P. Morgan Chase | $101,006 | ||||||||
| X | 39 | Johnson & Johnson | $70,074 | ||||||||
| X | 70 | Johnson Controls | $40,204 | ||||||||
| X | 17 | Kroger | $109,830 | ||||||||
| X | 73 | Liberty Mutual Insurance Group | $39,450 | ||||||||
| X | 60 | Lockheed Martin | $46,132 | ||||||||
| X | 47 | Lowe’s | $59,074 | ||||||||
| X | 42 | Marathon Petroleum | $64,566 | ||||||||
| X | 76 | Massachusetts Mutual Life Insurance | $38,243 | ||||||||
| X | 5 | McKesson | $181,241 | ||||||||
| X | 72 | Merck | $39,498 | ||||||||
| X | 40 | MetLife | $69,951 | ||||||||
| X | 25 | Microsoft | $93,580 | ||||||||
| X | 94 | Mondelez International | $29,636 | ||||||||
| X | 78 | Morgan Stanley | $37,897 | ||||||||
| X | 69 | Nationwide | $40,222 | ||||||||
| X | 61 | New York Life Insurance | $45,891 | ||||||||
| X | 91 | Nike | $30,601 | DEY | |||||||
| X | 100 | Northwestern Mutual | $28,111 | ||||||||
| X | 100 | Northwestern Mutual | $28,111 | ||||||||
| X | 77 | Oracle | $38,226 | ||||||||
| X | 44 | PepsiCo | $63,056 | ||||||||
| X | 55 | Pfizer | $48,851 | ||||||||
| X | 30 | Phillips 66 | $87,169 | ||||||||
| X | 34 | Procter & Gamble | $78,756 | ||||||||
| X | 50 | Prudential Financial | $57,119 | ||||||||
| X | 87 | Publix Super Markets | $32,619 | ||||||||
| X | 35 | State Farm Insurance Cos. | $75,697 | ||||||||
| X | 57 | Sysco | $48,681 | ||||||||
| X | 38 | Target | $73,785 | ||||||||
| X | 98 | Tesoro | $28,150 | ||||||||
| X | 82 | TIAA | $35,181 | ||||||||
| X | 99 | Time Warner | $28,118 | ||||||||
| X | 89 | TJX | $30,945 | ||||||||
| X | 96 | Twenty-First Century Fox | $28,987 | ||||||||
| X | 66 | Tyson Foods | $41,373 | ||||||||
| X | 80 | United Continental Holdings | $37,864 | ||||||||
| X | 45 | United Technologies | $61,047 | ||||||||
| X | 6 | UnitedHealth Group | $157,107 | ||||||||
| X | 48 | UPS | $58,363 | ||||||||
| X | 32 | Valero Energy | $81,824 | ||||||||
| X | 13 | Verizon | $131,620 | ||||||||
| X | 19 | Walgreens Boots Alliance | $103,444 | ||||||||
| A | 1 | Walmart | $482,130 | ||||||||
| X | 27 | Wells Fargo | $90,033 | ||||||||
| X | 92 | World Fuel Services | $30,380 | ||||||||
Ch.2 #1
| Types of Costs & Expenses | Excel 1 | ||||||||||||||||||||||||
| Natural Cost or Expense | Expense by the type of spending | ||||||||||||||||||||||||
| Functional cost or Expense | Expense by function, department or organizational heirarchy | ||||||||||||||||||||||||
| Fixed or Variable Cost or Expense | Varies with sales or production volume or does not | ||||||||||||||||||||||||
| Product or Period Cost or Expense | Part of product cost [CoGS / Inventoriable] or not | ||||||||||||||||||||||||
| Direct or Indirect Cost or Expense | Direct: tracable to a cost object [such as a product or capital project]; Indirect: not tracable may be assignable | ||||||||||||||||||||||||
| Conversion costs | Direct labor & manufacturing overhead [sometimes only variable OH] | ||||||||||||||||||||||||
| Prime costs | Direct materials & direct labor [sometimes varaible fringes on DL] | ||||||||||||||||||||||||
| Common cost | Cost on support to a group of cost objects but not tracable | ||||||||||||||||||||||||
| Tracable costs | Cost directly tracable to cost object | ||||||||||||||||||||||||
| Natural Expenses | Department or Function | ||||||||||||||||||||||||
| operating | operating | CoGS | distribution | ||||||||||||||||||||||
| Sales | Admin | Production | Warehouse | Totals: | |||||||||||||||||||||
| Salary Expense | 25,000 | 17,000 | 36,000 | 9,000 | 87,000 | ||||||||||||||||||||
| Wage Expense | 16,000 | 9,000 | 58,000 | 12,500 | 95,500 | ||||||||||||||||||||
| Production Direct labor | - 0 | - 0 | 115,000 | - 0 | 115,000 | ||||||||||||||||||||
| Fringe benefit expense | 13,000 | 8,800 | 74,000 | 6,400 | 102,200 | ||||||||||||||||||||
| Commission expense | 7,000 | - 0 | - 0 | - 0 | 7,000 | ||||||||||||||||||||
| Advertising expense | 9,500 | 400 | 750 | 200 | 10,850 | ||||||||||||||||||||
| Building rent expense | 3,200 | 3,600 | 12,500 | 4,800 | 24,100 | ||||||||||||||||||||
| Equipment lease expense | 400 | 2,300 | 6,900 | 2,230 | 11,830 | ||||||||||||||||||||
| Office supply expense | 1,900 | 1,400 | 2,300 | 600 | 6,200 | ||||||||||||||||||||
| Contract labor Expense | - 0 | - 0 | 34,000 | 3,320 | 37,320 | ||||||||||||||||||||
| Travel/entertainment exp. | 3,600 | 450 | 2,000 | 300 | 6,350 | ||||||||||||||||||||
| Professional services | 1,900 | 2,150 | 3,200 | - 0 | 7,250 | ||||||||||||||||||||
| Bank charges/fees | - 0 | 200 | - 0 | - 0 | 200 | ||||||||||||||||||||
| Depreciation expense | 2,200 | 1,975 | 44,000 | 11,000 | 59,175 | ||||||||||||||||||||
| Miscellaneous expense | 1,400 | 1,100 | 3,950 | 2,160 | 8,610 | ||||||||||||||||||||
| Total | 85,100 | 48,375 | 392,600 | 52,510 | 578,585 | ||||||||||||||||||||
| Sales | Admin | Production | Warehouse | ||||||||||||||||||||||
| Job | |||||||||||||||||||||||||
| Job AB1 | Job AB2 | Job AB3 | Totals | ||||||||||||||||||||||
| Salary Expense | 12,000 | 3,000 | - 0 | 15,000 | |||||||||||||||||||||
| Wage Expense | 2,300 | 6,200 | - 0 | 8,500 | |||||||||||||||||||||
| Production Direct labor | 21,000 | 23,000 | 66,000 | 110,000 | |||||||||||||||||||||
| Fringe benefit expense | 6,500 | 9,100 | 2,200 | 17,800 | |||||||||||||||||||||
| Commission expense | 2,500 | - 0 | 1,300 | 3,800 | |||||||||||||||||||||
| Advertising expense | - 0 | - 0 | - 0 | - 0 | |||||||||||||||||||||
| Building rent expense | - 0 | - 0 | - 0 | - 0 | |||||||||||||||||||||
| Equipment lease expense | - 0 | - 0 | 2,150 | 2,150 | |||||||||||||||||||||
| Office supply expense | - 0 | - 0 | - 0 | - 0 | |||||||||||||||||||||
| Contract labor Expense | 1,500 | 2,650 | 11,500 | 15,650 | |||||||||||||||||||||
| Travel/entertainment exp. | 250 | 350 | 600 | 1,200 | |||||||||||||||||||||
| Professional services | 1,110 | 850 | 1,950 | 3,910 | |||||||||||||||||||||
| Bank charges/fees | - 0 | - 0 | - 0 | - 0 | |||||||||||||||||||||
| Depreciation expense | - 0 | - 0 | - 0 | - 0 | |||||||||||||||||||||
| Miscellaneous expense | 875 | 625 | 325 | 1,825 | |||||||||||||||||||||
| Totals: | 48,035 | 45,775 | 86,025 | 179,835 | |||||||||||||||||||||
| Credit | |||||||||||||||||||||||||
| Accounts Payable | |||||||||||||||||||||||||
| 0 | |||||||||||||||||||||||||
| 0 | |||||||||||||||||||||||||
| 0 | |||||||||||||||||||||||||
| Product cost flows | |||||||||||||||||||||||||
| Manufacturing company | Raw materials | WIP | FG | CoGS | |||||||||||||||||||||
| Beginning Raw materials + | 100,000 | ||||||||||||||||||||||||
| Buy materials + | 20,000 | ||||||||||||||||||||||||
| Available for use Raw materials = | 120,000 | ||||||||||||||||||||||||
| Ending Raw materials - | 55,000 | ||||||||||||||||||||||||
| RM used for Production = | 65,000 | ||||||||||||||||||||||||
| Beginning WIP + | 77,000 | ||||||||||||||||||||||||
| Issued to WIP from Raw material inventory + | Direct cost | 65,000 | |||||||||||||||||||||||
| Direct labor + | Direct cost | 21,000 | Conversion cost | ||||||||||||||||||||||
| Applied overhead [Indirect costs] + | 42,000 | Conversion cost | |||||||||||||||||||||||
| Total Manufacturing costs; WIP for Period = | 205,000 | ||||||||||||||||||||||||
| Ending WIP Inventory - | 64,000 | ||||||||||||||||||||||||
| COG manufactured; [sent to FG] = | 141,000 | ||||||||||||||||||||||||
| Beginning FG + | 214,000 | ||||||||||||||||||||||||
| To FG from WIP; CoG Manufactured + | 141,000 | ||||||||||||||||||||||||
| CoG Available for Sale = | 355,000 | ||||||||||||||||||||||||
| Ending FG inventory - | 191,000 | ||||||||||||||||||||||||
| CoGS = | 164,000 | ||||||||||||||||||||||||
| Summary | Beginning | Additions | Ending | ||||||||||||||||||||||
| RW | 100,000 | 20,000 | 55,000 | ||||||||||||||||||||||
| WIP | 77,000 | 21,000 | 64,000 | ||||||||||||||||||||||
| FG | 214,000 | 42,000 | 191,000 | ||||||||||||||||||||||
| 391,000 | 83,000 | 310,000 | 164,000 | ||||||||||||||||||||||
| '+' | '+' | '-' | '=' |
Ch.2A
| Income statements: Chapter 2 | Excel 2 | Excel 1 | |||||||||||||||||||||||
| CoGS = Product cost // GAAP | Product cost flows | ||||||||||||||||||||||||
| Month: July | Var. Income Statement | Comment | Manufacturing company | Raw materials | WIP | FG | CoGS | ||||||||||||||||||
| Data set: | Manufacturing business | GAAP | Variable | Fixed | Beginning Raw materials + | 100,000 | |||||||||||||||||||
| A | Sold | 900 | units | sell price each: | $ 110.00 | Sales | Sales | Materials | Buy materials + | 20,000 | |||||||||||||||
| B | Purchased Materials Cost each | $ 62.00 | CoGS | CoGS | Available for use Raw materials = | 120,000 | |||||||||||||||||||
| C | sales rent per month | $ 3,000.00 | Sell.Exp | Sell.Exp | Ending Raw materials - | 55,000 | |||||||||||||||||||
| D | Insurance costs month: | $ 1,200.00 | Admin.Exp | Admin.Exp | RW used for Production = | 65,000 | |||||||||||||||||||
| E | Sales salaries exp: | $ 4,000.00 | Commission on sales | 4.50% | Sell.Exp | Sell.Exp | Sell.Exp | Y=4000+4.5%Xsales | |||||||||||||||||
| G | Admin salary expense | $ 2,800.00 | Admin.Exp | Admin.Exp | Beginning WIP + | 77,000 | |||||||||||||||||||
| H | Purchase new servers | $ 11,000.00 | N/A | N/A | N/A | N/A | Capital expenditure | Issued to WIP from Raw material inventory + | 65,000 | ||||||||||||||||
| I | Advertising expense | $ 950.00 | Sell.Exp | Sell.Exp | Direct labor + | 21,000 | |||||||||||||||||||
| J | Product brochures attached to each sold item | $ 1.75 | each | CoGS | CoGS | Applied overhead [Indirect costs] + | 42,000 | ||||||||||||||||||
| K | Communication expense | $ 2,450.00 | Admin.Exp | Admin.Exp | Total Manufacturing costs;WIP for Period = | 205,000 | |||||||||||||||||||
| L | Depreciation expense: Sales Office | $ 1,900.00 | Sell.Exp | Sell.Exp | Ending WIP Inventory - | 64,000 | |||||||||||||||||||
| M | Depreciation expense: general & admin | $ 1,800.00 | Admin.Exp | Admin.Exp | COG manufactured; [sent to FG] = | 141,000 | |||||||||||||||||||
| N | Shipping Warehousing rent | $ 1,050.00 | Sell.Exp | Sell.Exp | |||||||||||||||||||||
| O | Factory direct labor | $ 2,650.00 | Labor | Labor | Direct Labor | Beginning FG + | 214,000 | ||||||||||||||||||
| P | Component warehouse | $ 1,175.00 | CoGS | CoGS | Mfg. overhead | To FG from WIP; CoG Manufactured + | 141,000 | ||||||||||||||||||
| Q | Factory Mamagement | $ 2,290.00 | CoGS | CoGS | Mfg. overhead | CoG Available for Sale = | 355,000 | ||||||||||||||||||
| R | Fringe benefits for direct labor | $ 800.00 | CoGS | CoGS | Mfg. overhead | Ending FG inventory - | 191,000 | ||||||||||||||||||
| S | Fringe benefits for Admin. | $ 200.00 | Admin.Exp | Admin.Exp | |||||||||||||||||||||
| T | Process utilitiy cost | $ 400.00 | CoGS | CoGS | Mfg. overhead | CoGS = | 164,000 | ||||||||||||||||||
| U | Solder & solvents | $ 200.00 | CoGS | CoGS | Mfg. overhead | ||||||||||||||||||||
| V | Derperciation factory Bldg. & eqpmnt. | $ 1,860.00 | CoGS | CoGS | Summary | Beginning | Additions | Ending | |||||||||||||||||
| W | Variable Administrative expenses | 1% | of sales $s | RW | 100,000 | 20,000 | 55,000 | ||||||||||||||||||
| WIP | 77,000 | 21,000 | 64,000 | ||||||||||||||||||||||
| Month: July | Var. Income Statement | Comment | FG | 214,000 | 42,000 | 191,000 | |||||||||||||||||||
| Data set: | Manufacturing business | Product | Period | Fixed | Variable | 391,000 | 83,000 | 310,000 | 164,000 | ||||||||||||||||
| A | Sold | 900 | units | sell price each: | $ 110.00 | Revenue | $ 99,000 | '+' | '+' | '-' | '=' | ||||||||||||||
| B | Purchased Materials Cost each | $ 62.00 | $ 55,800 | $ 55,800 | x | ||||||||||||||||||||
| C | sales rent per month | $ 3,000.00 | $ 3,000 | $ 3,000 | |||||||||||||||||||||
| D | Insurance costs month: | $ 1,200.00 | $ 1,200 | $ 1,200 | |||||||||||||||||||||
| E | Sales salaries exp: | $ 4,000.00 | + Commission on sales | 4.50% | $ 8,455 | $ 4,000 | $ 4,455 | s | |||||||||||||||||
| G | Admin salary expense | $ 2,800.00 | $ 2,800 | $ 2,800 | |||||||||||||||||||||
| H | Purchase new servers | $ 11,000.00 | N/A | N/A | N/A | N/A | Capital expenditure | ||||||||||||||||||
| I | Advertising expense | $ 950.00 | $ 950 | $ 950 | |||||||||||||||||||||
| J | Product brochures attached to each sold item | $ 1.75 | each | $ 1,575 | $ 1,575 | x | |||||||||||||||||||
| K | Communication expense | $ 2,450.00 | $ 2,450 | $ 2,450 | |||||||||||||||||||||
| L | Depreciation expense: Sales Office | $ 1,900.00 | $ 1,900 | $ 1,900 | |||||||||||||||||||||
| M | Depreciation expense: general & admin | $ 1,800.00 | $ 1,800 | $ 1,800 | |||||||||||||||||||||
| N | Shipping Warehousing rent | $ 1,050.00 | $ 1,050 | $ 1,050 | |||||||||||||||||||||
| O | Factory direct labor | $ 2,650.00 | $ 2,650 | $ 2,650 | x | ||||||||||||||||||||
| P | Component warehouse | $ 1,175.00 | $ 1,175 | $ 1,175 | |||||||||||||||||||||
| Q | Factory Mamagement | $ 2,290.00 | $ 2,290 | $ 2,290 | |||||||||||||||||||||
| R | Fringe benefits for direct labor | $ 800.00 | $ 800 | $ 800 | x | ||||||||||||||||||||
| S | Fringe benefits for Admin. | $ 200.00 | $ 200 | $ 200 | |||||||||||||||||||||
| T | Process utilitiy cost | $ 400.00 | $ 400 | $ 400 | x | ||||||||||||||||||||
| U | Solder & solvents | $ 200.00 | $ 200 | $ 200 | x | ||||||||||||||||||||
| V | Derperciation factory Bldg. & eqpmnt. | $ 1,860.00 | $ 1,860 | $ 1,860 | |||||||||||||||||||||
| W | Variable Administrative expenses | 1% | of sales $s | $ 990 | $ 990 | s | |||||||||||||||||||
| Totalsè | $ 66,750 | $ 24,795 | $ 24,675 | $ 66,870 | ←Totals | ||||||||||||||||||||
| No change in FG/WIP inventory | Contribution format | ||||||||||||||||||||||||
| GAAP | Managerial Accounting | Variable | |||||||||||||||||||||||
| Sales | $ 99,000 | Sales | $ 99,000 | ||||||||||||||||||||||
| Cost of Goods Sold | $ 66,750 | Variable Costs & Expenses | |||||||||||||||||||||||
| Gross Margin [Gross Profit] | $ 32,250 | Cost of Goods Sold | $ 61,425 | x | $ 55,800 | $ 61,425 | $ 61,425 | ||||||||||||||||||
| Variable Selling Expenses | $ 4,455 | $ 1,575 | $ 5,445 | ||||||||||||||||||||||
| Selling & Administrative Expense | Variable Admin. Expenses | $ 990 | $ 2,650 | $ 66,870 | |||||||||||||||||||||
| Selling Expense | $ 15,355 | Total Var. Costs & Expenses | $ 66,870 | $ - 0 | |||||||||||||||||||||
| Administrative Expense | $ 9,440 | Contribution Margin | $ 32,130 | 32.5% | $ - 0 | ||||||||||||||||||||
| Total Sales & Administrative Expense | $ 24,795 | $ 800 | |||||||||||||||||||||||
| Fixed Expenses | $ - 0 | ||||||||||||||||||||||||
| Net Operating Income | $ 7,455 | Manufacturing | $ 5,325 | $ 400 | |||||||||||||||||||||
| Selling Expense | $ 10,900 | $ 200 | |||||||||||||||||||||||
| Administrative Expense | $ 8,450 | ||||||||||||||||||||||||
| Total Sales & Admin. Expense | $ 24,675 | ||||||||||||||||||||||||
| Net Operating Income | $ 7,455 | 0 | |||||||||||||||||||||||
| check | |||||||||||||||||||||||||
| Income is the same without consideration of ending inventory changes | |||||||||||||||||||||||||
| IF ending WIP nd/or FG changes then GAAP is NOT equal to Variable format | |||||||||||||||||||||||||
ACC220--Ch.2--HCT--&P of &N---&D,&T---&Z&F,&A
Ch.2B
| Chapter 2 Regression | ||||||||||||||
| Hi-Lo Method | for | Y = a + bX | Excel 3 | |||||||||||
| Compute "b" first then compute "a" | ||||||||||||||
| A | B | C | Modeled Y | |||||||||||
| A6 | Actual = X | Actual = Y | using hi - low | Excel Min = low | ||||||||||
| A7 | Units | $ | Excel Max = hi | Divide ∆ $s by | ||||||||||
| A8 | 2310 | $ 10,113 | $ 10,568 | |||||||||||
| A9 | 2453 | $ 12,691 | $ 11,085 | Difference:Min [Lo] - Max {Hi] | ||||||||||
| A10 | 2641 | $ 10,905 | $ 11,765 | ∆ Units | ∆$s | |||||||||
| A11 | 2874 | $ 12,949 | $ 12,608 | 3326 | $ 12,030 | ∆ $ & ∆ units | ||||||||
| A12 | 3540 | $ 15,334 | $ 15,017 | |||||||||||
| A13 | 4861 | $ 21,455 | $ 19,795 | Imputed variable per unit | ∆ $ / ∆ units = b | |||||||||
| A14 | 5432 | $ 21,270 | $ 21,860 | $ 3.617 | = b the variable cost per unit | |||||||||
| A15 | 5268 | $ 19,930 | $ 21,267 | |||||||||||
| A16 | 4628 | $ 21,860 | $ 18,952 | Formula | Hi | Low | ||||||||
| A17 | 3720 | $ 18,383 | $ 15,668 | Y = 3.617X + 2212.598 | Spent | $ 21,860 | $ 9,830 | |||||||
| A18 | 2106 | $ 9,830 | $ 9,830 | bX | $ 19,648 | $ 7,617 | ||||||||
| A19 | 2495 | $ 11,081 | $ 11,237 | after you have computed "b" then compute "a' | $ 2,212 | $ 2,213 | ||||||||
| x = Qty | Varible-bX | |||||||||||||
| Min | 2106 | $ 9,830 | Hi | $ 7,617.40 | $ 2,212.60 | fixed | = a | |||||||
| Max | 5432 | $ 21,860 | Low | $ 19,647.54 | $ 2,212.46 | fixed | = a | |||||||
| Regression | Regression Method for | Y = a + bX | Excel 4 | |||||||||||
| The RSQ(array1, array2) function returns the Square of the Pearson Product-Moment Correlation Coefficient between two arrays of data. | ||||||||||||||
| A | B | C | D | E | F | |||||||||
| A6 | Actual | Actual | Modeled | Modeled | $ | |||||||||
| A7 | Units | $ | $ | % accuracy | Difference | |||||||||
| A8 | 2310 | $ 10,113 | $ 10,932 | 8.1% | 819 | |||||||||
| A9 | 2453 | $ 12,691 | $ 11,467 | -9.6% | (1,224) | |||||||||
| A10 | 2641 | $ 10,905 | $ 12,170 | 11.6% | 1,265 | Can use excel wizard for help with formula | ||||||||
| A11 | 2874 | $ 12,949 | $ 13,041 | 0.7% | 92 | 0.916762505 | RSQ | RSQ = Parson squared, Excel = "+ RSQ" | ||||||
| A12 | 3540 | $ 15,334 | $ 15,531 | 1.3% | 197 | |||||||||
| A13 | 4861 | $ 21,455 | $ 20,469 | -4.6% | (986) | 3.7385 | Slope | = b | Excel "+ slope" | for computations by "hand" see cell A65 | ||||
| A14 | 5432 | $ 21,270 | $ 22,604 | 6.3% | 1,334 | $ 2,296 | Intercept | = a | Excel "+ intercept" | for computations by "hand" see cell A91 | ||||
| A15 | 5268 | $ 19,930 | $ 21,991 | 10.3% | 2,061 | |||||||||
| A16 | 4628 | $ 21,860 | $ 19,598 | -10.3% | (2,262) | =+SLOPE(C29:C40,B29:B40) | ||||||||
| A17 | 3720 | $ 18,383 | $ 16,204 | -11.9% | (2,179) | =+INTERCEPT(C29:C40,B29:B40) | ||||||||
| A18 | 2106 | $ 9,830 | $ 10,170 | 3.5% | 340 | std deviation | std deviation | |||||||
| A19 | 2495 | $ 11,081 | $ 11,624 | 4.9% | 543 | 4799 | Y | |||||||
| X | Y | sum►► | (0) | 4595 | Model | 0.9574771564 | Pearson | =+G41/G40 | ||||||
| 3527.3 | $ 15,483 | $ 15,483 | 0.9% | 1229 | X | 0.916762505 | P2 = RSQ | =+I41^2 | ||||||
| mean | regression error | |||||||||||||
| Ch.2 ACC220//HCT | Hi-Low | Hi-Low | Regression | Regression | Excel 5 | |||||||||
| Actual | Actual | Modeled | % | Modeled | % | Net Error | ||||||||
| Units | $ | $s | Error | $s | Error | Hi-Low | Regression | |||||||
| 2,310 | $ 10,113 | $ 10,568 | 4.5% | $ 10,932 | 8.1% | 4.5% | 8.1% | |||||||
| 2,453 | $ 12,691 | $ 11,085 | 12.7% | $ 11,467 | 9.6% | -12.7% | -9.6% | |||||||
| 2,641 | $ 10,905 | $ 11,765 | 7.9% | $ 12,170 | 11.6% | 7.9% | 11.6% | |||||||
| 2,874 | $ 12,949 | $ 12,608 | 2.6% | $ 13,041 | 0.7% | -2.6% | 0.7% | |||||||
| 3,540 | $ 15,334 | $ 15,017 | 2.1% | $ 15,531 | 1.3% | -2.1% | 1.3% | |||||||
| 4,861 | $ 21,455 | $ 19,795 | 7.7% | $ 20,469 | 4.6% | -7.7% | -4.6% | |||||||
| 5,432 | $ 21,270 | $ 21,860 | 2.8% | $ 22,604 | 6.3% | 2.8% | 6.3% | |||||||
| 5,268 | $ 19,930 | $ 21,267 | 6.7% | $ 21,991 | 10.3% | 6.7% | 10.3% | |||||||
| 4,628 | $ 21,860 | $ 18,952 | 13.3% | $ 19,598 | 10.3% | -13.3% | -10.3% | |||||||
| 3,720 | $ 18,383 | $ 15,668 | 14.8% | $ 16,204 | 11.9% | -14.8% | -11.9% | |||||||
| 2,106 | $ 9,830 | $ 9,830 | 0.0% | $ 10,170 | 3.5% | 0.0% | 3.5% | |||||||
| 2,495 | $ 11,081 | $ 11,237 | 1.4% | $ 11,624 | 4.9% | 1.4% | 4.9% | |||||||
| 6.4% | 6.9% | -2.5% | 0.9% | |||||||||||
| Average | Average | average error | ||||||||||||
| absolute error | absolute error | |||||||||||||
| RSQ | X | Y | Prod | X2 | Y2 | |||||||||
| by | 1,217 | 5,370 | 6,537,587 | 1,481,900 | 28,841,375 | |||||||||
| Hand | 1,074 | 2,792 | 2,999,986 | 1,154,192 | 7,797,591 | |||||||||
| 886 | 4,578 | 4,058,003 | 785,587 | 20,961,899 | ||||||||||
| 653 | 2,534 | 1,655,819 | 426,844 | 6,423,268 | ||||||||||
| (13) | 149 | (1,893) | 160 | 22,325 | ||||||||||
| (1,334) | (5,972) | 7,964,102 | 1,778,667 | 35,659,808 | ||||||||||
| (1,905) | (5,787) | 11,021,512 | 3,627,755 | 33,484,547 | ||||||||||
| (1,741) | (4,447) | 7,740,019 | 3,029,920 | 19,772,103 | ||||||||||
| (1,101) | (6,377) | 7,018,493 | 1,211,467 | 40,660,815 | ||||||||||
| RSQ = Pearson2 = correlation coefficient2 | (193) | (2,900) | 558,653 | 37,120 | 8,407,584 | |||||||||
| 1,421 | 5,653 | 8,035,390 | 2,020,188 | 31,961,120 | ||||||||||
| RSQ | 1,032 | 4,402 | 4,544,761 | 1,065,712 | 19,381,273 | |||||||||
| by | Sum of products | 62,132,433 | 16,619,515 | 253,373,707 | Sums | |||||||||
| Hand | 4,077 | 15,918 | SqRoot of sum | |||||||||||
| 64,891,818 | Products of Square roots | |||||||||||||
| 0.9575 | Pearson [P] = r | |||||||||||||
| 0.9168 | Pearson2 = RSQ | |||||||||||||
| Slope By "Hand" | ||||||||||||||
| b = slope | ||||||||||||||
| _ X = mean of X | _ Y = mean of Y | |||||||||||||
| X | Y | X - mean | Y - mean | X x Y | ∆X2 | |||||||||
| 2310 | $ 10,113 | -1217.3 | $ (5,370) | 6537587 | 1481900.44444444 | |||||||||
| 2453 | $ 12,691 | (18.03) | -1074.3 | $ (2,792) | 2999986 | 1154192.11111111 | ||||||||
| 2641 | $ 10,905 | 9.50 | -886.3 | $ (4,578) | 4058003 | 785586.777777778 | ||||||||
| 2874 | $ 12,949 | (8.77) | -653.3 | $ (2,534) | 1655819 | 426844.444444445 | ||||||||
| 3540 | $ 15,334 | (3.58) | 12.7 | $ (149) | -1893 | 160.4444444444 | ||||||||
| 4861 | $ 21,455 | (4.63) | 1333.7 | $ 5,972 | 7964102 | 1778666.77777778 | ||||||||
| 5432 | $ 21,270 | 0.32 | 1904.7 | $ 5,787 | 11021512 | 3627755.11111111 | ||||||||
| 5268 | $ 19,930 | (8.17) | 1740.7 | $ 4,447 | 7740019 | 3029920.44444444 | ||||||||
| 4628 | $ 21,860 | 3.02 | 1100.7 | $ 6,377 | 7018493 | 1211467.11111111 | ||||||||
| 3720 | $ 18,383 | (3.83) | 192.7 | $ 2,900 | 558653 | 37120.4444444444 | ||||||||
| 2106 | $ 9,830 | (5.30) | -1421.3 | $ (5,653) | 8035390 | 2020188.44444444 | ||||||||
| 2495 | $ 11,081 | (3.22) | -1032.3 | $ (4,402) | 4544761 | 1065712.11111111 | ||||||||
| X | Y | -0.0 | 0.0 | 62132433.3333333 | 16619514.6666667 | |||||||||
| 3527.3 | $ 15,483 | $ (4) | ||||||||||||
| mean | 3.7385 | slope | ||||||||||||
| Intercept By "Hand" | Y = a + bX | |||||||||||||
| after you have the slope then | ||||||||||||||
| intercept = [Mean of Y] - [mean of X]*[slope] | ||||||||||||||
| _ Y | $ 15,483 | |||||||||||||
| _ X | 3527.3 | |||||||||||||
| Slope | 3.7385 | |||||||||||||
| Intercept | 2,296.4 |
HCT---ACC220---&P of &N---&D,&T---&F,&A
Pearson product moment correlation coefficient Assumes Normal Distribution Sum of the products of the difference from the mean for x and y divided by the square root of the product of the sum the squares of the difference from the mean for x time same sum for Y
The variability of Y attributable to the variability of X
Parson done by "hand" using formula above
Ch. 3 NEW
| Integrated Example | Ch.3 | Variance is material | |||||||||||||||||||||||
| Job Order Costing | Variance must be capitalized @ reporting date for GAAP | ||||||||||||||||||||||||
| M | WIP | FG | Operating 7 days a week | ||||||||||||||||||||||
| A. | Overhead Budget for the Year: | Y = a + bX | Beginning | $8,000 | $11,000 | $14,000 | |||||||||||||||||||
| Variable Overhead per Direct Labor [DL] Hrs. | $ 2.75 | b | Est | Additions | $45,000 | $92,500 | $27,000 | June | May | ||||||||||||||||
| Estimated DL hrs. | 42,000 | X | Est | Used/completed/sold | ($43,000) | ($27,000) | ($27,000) | Actual overhead spending | $ 1,085,000 | $ 1,000,200 | |||||||||||||||
| Variable | $ 115,500 | bX | Est | Ending | $10,000 | $76,500 | $14,000 | Applied overhead | $ 962,000 | $ 933,000 | |||||||||||||||
| Fixed Overhead | $ 94,500 | a | Est | Under applied | $ 123,000 | $ 67,200 | |||||||||||||||||||
| $ 210,000 | $ 210,000 | Y=a+bX | Portion of month in inventory | 30/30 | 18/31 | ||||||||||||||||||||
| 42,000 | POHR | $ 5.00 | per DL Hr. | 100.0% | 58.1% | ||||||||||||||||||||
| $5.00 | Dr/(Cr) | Dr/(Cr) | |||||||||||||||||||||||
| Dr/(Cr) | Dr/(Cr) | Income statement | Ending inventory/days | 48.00 | |||||||||||||||||||||
| Contra acct. or | Inventory | Overhead spending in CoGS | |||||||||||||||||||||||
| Liability Acct. | Materials | WIP | FG | CoGS | CoGS | Selling & Admin Exp | Balance in inventory @ June end | $ 162,019 | |||||||||||||||||
| May ending Inventory [Beginning fo June] | $8,000 | $11,000 | $14,000 | Period | |||||||||||||||||||||
| June Ending Inventory before adjustment | $10,000 | $76,500 | $14,000 | ||||||||||||||||||||||
| Material in production | |||||||||||||||||||||||||
| June Activity | Beginning | $8,000 | |||||||||||||||||||||||
| 1 | Purchase Materials | A/P | ($45,000) | $45,000 | Added | $45,000 | |||||||||||||||||||
| Ending | ($10,000) | ||||||||||||||||||||||||
| 2 | Issued Materials from inventory | $43,000 | materials from inventory used in period | Cost including allocation of Fixed Cost | |||||||||||||||||||||
| Materials for products | ($43,000) | $40,000 | ($3,000) | less materials to overhead | Variable Cost: Direct Cost [Direct Labor & Materials] + | ||||||||||||||||||||
| Indirect materials | $3,000 | $40,000 | Materials used in production | Variable overhead [within a relevant range] | |||||||||||||||||||||
| Marginal Cost: the out-of-packet costs to produce [sell] next unit | |||||||||||||||||||||||||
| 3 | Payroll for Period | Total Manufacturing costs | |||||||||||||||||||||||
| Sales Salaries | $2,000 | Materials | $40,000 | Manufacturing Overhead Control | |||||||||||||||||||||
| Direct labor charges to jobs [3500 hrs.@$10/hr] | Wage payable | ($49,000) | $35,000 | DL | SG&A | DL | $35,000 | Accounts are resident in CoGS | |||||||||||||||||
| Indirect manufacturing labor | $12,000 | Applied overhead | $17,500 | Spending Accounts | |||||||||||||||||||||
| Mfg.OH | $92,500 | Salary Expense | 66,000 | ||||||||||||||||||||||
| 4 | Other Manufacturing overhead spending | Wage Expense | 78,000 | ||||||||||||||||||||||
| Utilities | ($1,700) | $1,700 | Production Direct labor | 215,000 | |||||||||||||||||||||
| Accum. Depreciation | ($2,900) | $2,900 | Fringe benefit expense | 74,000 | |||||||||||||||||||||
| $3,000 | |||||||||||||||||||||||||
| Factory Property taxes payable | ($1,000) | $1,000 | $12,000 | Commission expense | - 0 | $ 710,000 | Budget/estimated OH Spending | ||||||||||||||||||
| $1,700 | Advertising expense | 750 | 35500 | Budget/estimated Dl Hrs. | |||||||||||||||||||||
| 5 | Apply overhead to jobs using POHR | 3500 | hrs | $17,500 | ($17,500) | $2,900 | Building rent expense | 21,000 | $ 20.00 | POHR | |||||||||||||||
| $ 5.00 | $1,000 | Equipment lease expense | 5,800 | 34,000 | Acutal DL Hrs. | ||||||||||||||||||||
| 6 | Incur Selling expense-Advertising | $3,500 | $750 | $20,600 | Office supply expense | 2,300 | $680,000 | Applied Overhead | |||||||||||||||||
| Contract labor Expense | 34,000 | ||||||||||||||||||||||||
| 7 | Completed Work from WIP | ($27,000) | $27,000 | Beginning | $11,000 | WIP | Travel/entertainment exp. | 2,000 | |||||||||||||||||
| added | $92,500 | Professional services | 3,200 | ||||||||||||||||||||||
| Ending | ($76,500) | WIP | Bank charges/fees | - 0 | |||||||||||||||||||||
| To FG | $27,000 | Cost of Goods manufactured | Depreciation expense | 144,000 | |||||||||||||||||||||
| Miscellaneous expense | 3,950 | ||||||||||||||||||||||||
| 8 | Sold FG to Customer | ($27,000) | $27,000 | Beginning | $14,000 | Total | 650,000 | this had been debited to CoGS | |||||||||||||||||
| added | $27,000 | inventory did NOT change | |||||||||||||||||||||||
| Ending | ($14,000) | usually beginning ≠ ending | Applied overhead | (680,000) | this was credited thru Applied OH acct. to CoGS | ||||||||||||||||||||
| To CoGS | $27,000 | Cost of Goods Sold [CoGS] | |||||||||||||||||||||||
| Net Effect | (30,000) | decrease CoGS | |||||||||||||||||||||||
| B 1 | End of period adjustment for over/under applied overhead | WIP | FG | $3,100 | ←Sum | under applied overhead | +Q51+P51 | ||||||||||||||||||
| $s applied OH in Inventory [less than 1 Mo. In Inv.] GIVEN | Memo | $10,000 | $1,500 | MOH remaing in Inv. | % Underapplied | ($17,500) | $20,600 | 17.7% | $3,100 | ||||||||||||||||
| Add | 17.7% | $1,771 | $266 | ($2,037) | Entry | 17.7% | Applied | Spending | under | -17.7% | |||||||||||||||
| Overhead is applied on labor Hrs | Inventory up | 65.71% | applied | ||||||||||||||||||||||
| Dr. Inventory= Under applied [inventory too low, profit too low] | 87% | 13% | $3,100 | WIP | FG | 35000 | 17500 | ||||||||||||||||||
| (Cr.) Inventory= over applied [Inventory too high, profit too high] | $10,000 | $1,500 | $11,500 | 3500 | 3500 | ||||||||||||||||||||
| If over applied Cr. Inventory AND dr. CoGS | +11500/17500 = | 65.71% | of a month | 10 | 5 | ||||||||||||||||||||
| +66% * $3100 | $2,037 | ||||||||||||||||||||||||
| B 2 | End of period adjustment for over/under applied overhead | WIP | FG | $7,264 | ←Sum | under applied overhead | Integrated Example | ||||||||||||||||||
| $s applied OH in Inventory [more than 1 Mo. In Inv.] | Memo | $8,000 | $32,000 | çççççMore than one month | |||||||||||||||||||||
| ($728) | $ (2,914) | $3,642 | Entry | ||||||||||||||||||||||
| Overhead is applied on labor Hrs | Inventory up | ||||||||||||||||||||||||
| Dr. Inventory= Under applied [inventory too low, profit too low] | |||||||||||||||||||||||||
| (Cr.) Inventory= over applied [Inventory too high, profit too high] | |||||||||||||||||||||||||
| If over applied Cr. Inventory AND dr. CoGS | $40,000 | Applied in inventory | |||||||||||||||||||||||
| $17,500 | Applied this Mo | ||||||||||||||||||||||||
| $16,000 | Applied prior Mo | ||||||||||||||||||||||||
| $16,500 | Applied 2nd Mo. Prior | ||||||||||||||||||||||||
| Over/(under applied) | Adjustment to ending inventory | ||||||||||||||||||||||||
| # mo Applied in inventory | 1.00 | $17,500 | Applied this Mo | ($3,100) | $ (3,100) | 17.7% | under | applied | |||||||||||||||||
| 1.00 | $16,000 | Applied prior Mo | $600 | $ 600 | given | ||||||||||||||||||||
| 0.39 | $6,500 | Applied 2nd Mo. Prior | ($2,900) | $ (1,142) | given | ||||||||||||||||||||
| 2.39 | $ 40,000 | ($5,400) | $ (3,642) | ||||||||||||||||||||||
| $8,000 | $32,000 | $40,000 | |||||||||||||||||||||||
| 20.0% | 80.0% | 100.0% | |||||||||||||||||||||||
| $ (728) | $ (2,914) | $ (3,642) | |||||||||||||||||||||||
ACC220---HCT---&P of&N---&D, &T---&F, &A
Ch.3 Job Cost OLD
| Integrated Example | Ch.3 | Variance is material | |||||||||||||||||||||||
| Job Order Costing | See new file | Variance must be capitalized @ reporting date for GAAP | |||||||||||||||||||||||
| Operating 7 days a week | |||||||||||||||||||||||||
| A. | Overhead Budget for the Year: | Y = a + bX | |||||||||||||||||||||||
| Variable Overhead per Direct Labor [DL] Hrs. | $ 2.75 | b | June | May | |||||||||||||||||||||
| Estimated DL hrs. | 42,000 | X | Actual overhead spending | $ 1,085,000 | $ 1,000,200 | ||||||||||||||||||||
| $ 115,500 | bX | Applied overhead | $ 962,000 | $ 933,000 | |||||||||||||||||||||
| Fixed Overhead | $ 94,500 | a | Under applied | $ 123,000 | $ 67,200 | ||||||||||||||||||||
| $ 210,000 | Y=a+bX | Portion of month in inventory | 30/30 | 18/31 | |||||||||||||||||||||
| POHR | $ 5.00 | per DL Hr. | 100.0% | 58.1% | |||||||||||||||||||||
| Dr/(Cr) | Dr/(Cr) | ||||||||||||||||||||||||
| Dr/(Cr) | Dr/(Cr) | Income statement | Ending inventory/days | 48.00 | |||||||||||||||||||||
| Contra acct. or | Inventory | Overhead spending in CoGS | |||||||||||||||||||||||
| Liability Acct. | Materials | WIP | FG | CoGS | Cogs | Selling & Admin Exp | Balance in inventory @ June end | $ 162,019 | |||||||||||||||||
| May ending Inventory | $8,000 | $11,000 | $14,000 | ||||||||||||||||||||||
| June Ending Inventory before adjustment | $10,000 | $76,500 | $14,000 | ||||||||||||||||||||||
| Material in production | |||||||||||||||||||||||||
| June Activity | Beginning | $8,000 | |||||||||||||||||||||||
| 1 | Purchase Materials | A/P | ($45,000) | $45,000 | Added | $45,000 | |||||||||||||||||||
| Ending | ($10,000) | ||||||||||||||||||||||||
| 2 | Issued Materials from inventory | $43,000 | materials from inventory used in period | Cost including allocation of Fixed Cost | |||||||||||||||||||||
| Materials for products | ($43,000) | $40,000 | ($3,000) | less materials to overhead | Variable Cost: Direct Cost [Direct Labor & Materials] + | ||||||||||||||||||||
| Indirect materials | $3,000 | $40,000 | Materials used in production | Variable overhead [within a relevant range] | |||||||||||||||||||||
| Marginal Cost: the out-of-packet costs to produce [sell] next unit | |||||||||||||||||||||||||
| 3 | Payroll for Period | Total Manufacturing costs | |||||||||||||||||||||||
| Sales Salaries | $2,000 | Materials | $40,000 | Manufacturing Overhead Control | |||||||||||||||||||||
| Direct labor charges to jobs [3500 hrs.] | Wage payable | ($49,000) | $35,000 | DL | $35,000 | Accounts are resident in CoGS | |||||||||||||||||||
| Indirect manufacturing labor | $12,000 | Applies overhead | $17,500 | Spending Accounts | |||||||||||||||||||||
| $92,500 | Salary Expense | 66,000 | |||||||||||||||||||||||
| 4 | Other Manufacturing overhead spending | Wage Expense | 78,000 | ||||||||||||||||||||||
| Utilities | ($1,700) | $1,700 | Production Direct labor | 215,000 | |||||||||||||||||||||
| Accum. Depreciation | ($2,900) | $2,900 | Fringe benefit expense | 74,000 | |||||||||||||||||||||
| Property taxes payable | ($1,000) | $1,000 | Commission expense | - 0 | |||||||||||||||||||||
| Advertising expense | 750 | ||||||||||||||||||||||||
| 5 | Apply overhead to jobs using POHR | 3500 | hrs | $17,500 | ($17,500) | Building rent expense | 21,000 | ||||||||||||||||||
| Equipment lease expense | 5,800 | ||||||||||||||||||||||||
| 6 | Incur Selling expense-Advertising | $750 | Office supply expense | 2,300 | |||||||||||||||||||||
| Contract labor Expense | 34,000 | ||||||||||||||||||||||||
| 7 | Completed Work from WIP | ($27,000) | $27,000 | Beginning | $11,000 | WIP | Travel/entertainment exp. | 2,000 | |||||||||||||||||
| added | $92,500 | Professional services | 3,200 | ||||||||||||||||||||||
| Ending | ($76,500) | WIP | Bank charges/fees | - 0 | |||||||||||||||||||||
| To FG | $27,000 | Cost of Goods manufactured | Depreciation expense | 144,000 | |||||||||||||||||||||
| Miscellaneous expense | 3,950 | ||||||||||||||||||||||||
| 8 | Sold FG to Customer | ($27,000) | $27,000 | Beginning | $14,000 | Total | 650,000 | this had been debited to CoGS | |||||||||||||||||
| added | $27,000 | ||||||||||||||||||||||||
| Ending | ($14,000) | usually beginning ≠ ending | Applied overhead | (680,000) | this was credited thru Applied OH acct. to CoGS | ||||||||||||||||||||
| To CoGS | $27,000 | Cost of Goods Sold [CoGS] | |||||||||||||||||||||||
| Net Effect | (30,000) | decrease CoGS | |||||||||||||||||||||||
| B 1 | End of period adjustment for over/under applied overhead | WIP | FG | $3,100 | ←Sum | under applied overhead | |||||||||||||||||||
| $s applied OH in Inventory [less than 1 Mo. In Inv.] | Memo | $10,000 | $1,500 | % underaplied | ($17,500) | $20,600 | 17.7% | ||||||||||||||||||
| Add | 17.7% | $1,771 | $266 | ($2,037) | Entry | 17.7% | Applied | Spending | under | ||||||||||||||||
| Overhead is applied on labor Hrs | Inventory up | applied | |||||||||||||||||||||||
| Dr. Inventory= Under applied [inventory too low, profit too low] | 35000 | 17500 | |||||||||||||||||||||||
| (Cr.) Inventory= over applied [Inventory too high, profit too high] | 3500 | 3500 | |||||||||||||||||||||||
| If over apllied Cr. Inventory AND dr. CoGS | 10 | 5 | |||||||||||||||||||||||
| B 2 | End of period adjustment for over/under applied overhead | WIP | FG | $4,163 | ←Sum | under applied overhead | Integrated Example | ||||||||||||||||||
| $s applied OH in Inventory [> 1 Mo. In Inv.] | Memo | $8,000 | $32,000 | % underaplied | |||||||||||||||||||||
| Add | 0.0% | ($728) | $ (2,914) | $3,642 | Entry | ||||||||||||||||||||
| Overhead is applied on labor Hrs | Inventory up | ||||||||||||||||||||||||
| Dr. Inventory= Under applied [inventory too low, profit too low] | |||||||||||||||||||||||||
| (Cr.) Inventory= over applied [Inventory too high, profit too high] | |||||||||||||||||||||||||
| $0 | ($11,900) | ERROR:#DIV/0! | |||||||||||||||||||||||
| If over apllied Cr. Inventory AND dr. CoGS | $40,000 | Aplied in inventory | Applied | Spending | under | ||||||||||||||||||||
| $17,500 | Applied this Mo | applied | |||||||||||||||||||||||
| $16,000 | Applied prior Mo | ||||||||||||||||||||||||
| $16,500 | Appilied 2nd Mo. Prior | ||||||||||||||||||||||||
| Over/(under applied) | Adjustment to ending inventory | ||||||||||||||||||||||||
| # mo Applied in inventory | 1.00 | $17,500 | Applied this Mo | ($3,100) | $ (3,100) | 17.7% | under | applied | |||||||||||||||||
| 1.00 | $16,000 | Applied prior Mo | $600 | $ 600 | |||||||||||||||||||||
| 0.39 | $6,500 | Appilied 2nd Mo. Prior | ($2,900) | $ (1,142) | |||||||||||||||||||||
| 2.39 | $ 40,000 | ($5,400) | $ (3,642) | ||||||||||||||||||||||
| $8,000 | $32,000 | $40,000 | |||||||||||||||||||||||
| 20.0% | 80.0% | 100.0% | |||||||||||||||||||||||
| $ (728) | $ (2,914) | $ (3,642) | |||||||||||||||||||||||
1
3
1
1
4
2
Ch. 4 process Board e.g.
| Board Example | ||||||||||||||||
| Weighted Average | Simple | |||||||||||||||
| Ch. 4 Process Costing | Equivalent | |||||||||||||||
| $s | Qty | % | Units | |||||||||||||
| Beginning | $ 22,000 | 6,000 | 75% | 4,500 | 6,000 | |||||||||||
| 10,000 | ||||||||||||||||
| Started in Period | $ 50,000 | 10,000 | 16,000 | |||||||||||||
| Completed in period | 11,000 | 100% | 11,000 | 11,000 | ||||||||||||
| 5,000 | ||||||||||||||||
| Ending | 5,000 | 60% | 3,000 | 16,000 | ||||||||||||
| Per Unit | $ 22,000 | Beginning $s | ||||||||||||||
| $ 50,000 | Period $ | |||||||||||||||
| $ 72,000 | Beg +Period | |||||||||||||||
| Completed units corresponding to Beg + Period | ||||||||||||||||
| 11,000 | Units | |||||||||||||||
| Cost per equivalent unit | ||||||||||||||||
| Units | 11,000 | Completed = 100% | ||||||||||||||
| 3,000 | Ending equivalent units | |||||||||||||||
| 14,000 | Total: | |||||||||||||||
| $ 5.14 | Weighted average cost per equivalent unit | |||||||||||||||
| + 3000 X 5.14 = | 15,420 | Ending WIP inventory $s | ||||||||||||||
| Same Data Set @ Weighted Average | ||||||||||||||||
| FIFO | Equivalent | |||||||||||||||
| $s | Qty | % | Units | |||||||||||||
| Period only | $ 50,000 | |||||||||||||||
| 100% - 75% | to complete | |||||||||||||||
| Completed from Beginning | 6,000 | 25% | 1,500 | beginning | ||||||||||||
| Started | 10,000 | Started in Per. | 10,000 | 11,000 | completed | |||||||||||
| Started & completed | 11000-6000= | 5,000 | 100% | 5,000 | 11000 completed | End | (5,000) | (6,000) | started with Beginning | |||||||
| 5000from started | Stared & c0mpleted | 5,000 | 5,000 | End | ||||||||||||
| Ending | NOT complete | 5,000 | 60% | 3,000 | ||||||||||||
| 1,500 | ||||||||||||||||
| Equivalent units done for period costsèè | 9,500 | 5,000 | $ 50,000 | |||||||||||||
| Cost Each | $ 5.26 | 3,000 | 9,500 | |||||||||||||
| 9,500 | $ 5.26 | |||||||||||||||
| Ending inventory | $ 15,780 | |||||||||||||||
| 5.26 x 3000 | ||||||||||||||||
| Sheet | Income | Corrected | ||||||||||||||
| Balance | Statement | Hand-out | ||||||||||||||
| Account Title | Accounts | Accounts | Feb.6-2017 | |||||||||||||
| Work-in-process | Inventory | |||||||||||||||
| Raw materials | Inventory | |||||||||||||||
| Finished Goods | Inventory | |||||||||||||||
| Wages Payable for direct labor | Wages payable | |||||||||||||||
| Direct Labor from wages payable | Inventory [WIP] | |||||||||||||||
| Overhead expense Accounts [spending accts.] | CoGS: manufacturing spending [Dr.] | |||||||||||||||
| Applied overhead Acct. [@actual OR @ POHR] | CoGS: manufacturing spending [Cr.] | |||||||||||||||
| WIP is debited | ||||||||||||||||
| Sheet | Income | Corrected | ||||||||||||||
| Balance | Statement | Hand-out | ||||||||||||||
| Account Title | Accounts | Accounts | Feb.6-2017 | |||||||||||||
| Work-in-process | Inventory | |||||||||||||||
| Raw materials | Inventory | |||||||||||||||
| Finished Goods | Inventory | |||||||||||||||
| Wages Payable for direct labor | Wages payable | |||||||||||||||
| Direct Labor from wages payable | Inventory [WIP] | |||||||||||||||
| Overhead expense Accounts [spending accts.] | CoGS: manufacturing spending [Dr.] | |||||||||||||||
| Applied overhead Acct. [@actual OR @ POHR] | CoGS: manufacturing spending [Cr.] | |||||||||||||||
| WIP is debited |
Handout
Ch. 4 slides 40-50
| Ch.4 Process cost | ||||||||||||||||||
| Weighted Average Inventory Valuation Method (FIFO Average) | Same if total overhead | Weighted average | Assembly Department | |||||||||||||||
| Department: SMD | Materials | Materials | Materials | Materials | Conversion = DL + Variable Overhead | Total $ | Cost Reconciliation / Weighted Average Method | |||||||||||
| Units | $ | % complete | Equiv. Units | Units | $ | % complete | Equiv. Units | Costs to be accounted for: | ||||||||||
| Qty | $ | % | Eq. Qty | Qty | $ | % | Eq. Qty | Cost of beginning Work in Process Inventory | $15,175 | |||||||||
| Beginning | 200 | 200 | $9,600 | 55% | 110 | 200 | $5,575 | 30% | 60 | $ 15,175 | Costs added to production during the period | $729,500 | ||||||
| Total cost to be accounted for | $744,675 | |||||||||||||||||
| Started | 5000 | 5000 | $378,600 | 5000 | $350,900 | added in period | $ 729,500 | Total costs to be accounted | $744,675 | |||||||||
| solve | Completed | 4800 | 4800 | 100% | 4800 | 4800 | 100% | 4800 | ||||||||||
| 10000 | ||||||||||||||||||
| Ending | -400 | 400 | 40% | 160 | 400 | 25% | 100 | |||||||||||
| Cost accounted for as follows: | ||||||||||||||||||
| Equivalent Production | $388,200 | 4960 | $356,475 | 4900 | 200 | $356,475 | Cost of units transferred out | $ 724,877 | ||||||||||
| Ending WIP Inventory | $19,798 | |||||||||||||||||
| Total $ for Wghtd. Avgr. inventory valuation | $378,200 | $356,475 | $ 734,675 | 200 | Cost of ending Work in Process Inventory | $19,798 | ||||||||||||
| Per unit | $78.27 | $72.75 | $ 744,675 | 5000 | 4900 | Ending WIP Inventory | $ 19,798 | |||||||||||
| 5200 | 72.75 | Total cost accounted for | $ 744,675 | |||||||||||||||
| To next department | 4800 | $375,677 | 100% | 4800 | 4800 | $349,200 | 100% | 4800 | $ 724,877 | |||||||||
| Ending WIP for SMD | 400 | $12,523 | 40% | 160 | 400 | $7,275 | 25% | 100 | $ 19,798 | 4800 | $72.75 | |||||||
| $388,200 | 4960 | $356,475 | 4900 | $ 744,675 | 400 | 100 | End | |||||||||||
| 0.00 | 5200 | $7,275 | End Inv. $ | |||||||||||||||
| FIFO: | Appendix A | Same if total overhead | ||||||||||||||||
| Department: SMD | Materials | Conversion = DL + Variable Overhead | Total $ | F I F O | ||||||||||||||
| Units | $ | % complete | Equiv. Units | Units | $ | % complete | Equiv. Units | |||||||||||
| M | ||||||||||||||||||
| Beginning | 200 | $9,600 | 55% | 110 | 200 | $5,575 | 30% | 60 | $ 15,175 | 90 | ||||||||
| Completion of beginning units | 45% | 90 | to complete beginning | 70% | 140 | 4600 | ||||||||||||
| 160 | ||||||||||||||||||
| Started | 5000 | $378,600 | 5000 | $350,900 | $ 719,500 | 4850 | ||||||||||||
| Completed | 4800 | 100% | 4800 | 100% | 4800 | LOH | ||||||||||||
| 140 | to finish beginning | |||||||||||||||||
| Started & completed this period | 4600 | 100% | 4600 | 4600 | 100% | 4600 | 4600 | start & complete | ||||||||||
| 100 | End Eq. Qty | |||||||||||||||||
| Ending | 400 | 40% | 160 | 400 | 25% | 100 | 4840 | |||||||||||
| Equivalent Production | $378,600 | 4850 | Work done in the period only | 4840 | ||||||||||||||
| Total $ for FIFO | $378,600 | $350,900 | $ 719,500 | $350,900 | ||||||||||||||
| Per unit | $78.06 | $72.50 | $ 150.56 | 4840 | ||||||||||||||
| 72.50 | 100 | |||||||||||||||||
| To next department | 4800 | $376,040 | 100% | 4800 | 4800 | $349,225 | 100% | 4800 | $ 725,265 | $ 7,250 | ||||||||
| Ending WIP for SMD | 400 | $12,160 | 40% | 160 | 400 | $7,250 | 25% | 100 | $ 19,410 | |||||||||
| $378,200 | 4960 | $356,475 | 4900 | $ 744,675 | ||||||||||||||
| Ending Inventory | Qty | $ | % compl. | Eq. Qty | Qty | $ | % compl. | Eq. Qty | Total | |||||||||
| Weighted Average | 400 | $12,523 | 40% | 160 | 400 | $7,275 | 0.25 | 100 | $19,798 | |||||||||
| FiFO | 400 | $12,160 | 40% | 160 | 400 | $7,250 | 0.25 | 100 | $19,410 | |||||||||
| difference | 0 | $ 362.58 | 0 | 0 | 0 | $ 25.00 | 0 | 0 | $ 387.58 | |||||||||
| Per unit | $0.20 | $0.25 | ||||||||||||||||
| $78.27 | $72.75 | |||||||||||||||||
| $78.06 | $72.50 | |||||||||||||||||
| $0.20 | $0.25 | |||||||||||||||||
| Separate File tab "Cost Allocaton" | ||||||||||||||||||
| Maintenance | ||||||||||||||||||
| $600,000 | ||||||||||||||||||
| 37.50% | Machining | $225,000 | ||||||||||||||||
| 62.50% | Assembly | $375,000 | + | |||||||||||||||
| IT | ||||||||||||||||||
| $116,000 | ||||||||||||||||||
| 88.9% | Machining | $103,111 | ||||||||||||||||
| 11.1% | Assembly | $12,889 | ||||||||||||||||
| 600000 | ||||||||||||||||||
| Reciprocal Method | ||||||||||||||||||
| Function A: with reciprocal allocation of OH | Function A = Maintenance | |||||||||||||||||
| Function B = IT | ||||||||||||||||||
| Function A with reciprocal allocation = | ||||||||||||||||||
| Function A Spending + (Function A % usage of Function B X Function B Spending) | ||||||||||||||||||
| Maintenance = | $600000 + (10% X IT) | |||||||||||||||||
| IT = | $116000 + (20% X Maintenance) | |||||||||||||||||
| Maintenance = | $600000 + 10% X ($116000 + (20% X Maintainance)) | |||||||||||||||||
| $600000 + 10% X $116000 + 10% X (20% X Maintenance) | ||||||||||||||||||
| $600000 + $116000 + 2% X Maintanance | ||||||||||||||||||
| 98% Maintenance = | $600000 + $11600 | |||||||||||||||||
| 98% Maintenance = | $600000 + $11600 | |||||||||||||||||
| 98% Maintenance = | $611,600 | |||||||||||||||||
| ah | 100% Maintenance = | $ 624,082 | ||||||||||||||||
| IT = $116000 +20%*PM | ||||||||||||||||||
| IT = $116000 +20%*$624082 | Reciprocal | Budget | Allocated | |||||||||||||||
| ai | IT = $116000 + $124816 | $ 624,082 | $ - 0 | - 0 | ||||||||||||||
| IT = | $ 240,816 | $ 240,816 | $ - 0 | - 0 | ||||||||||||||
| $ 864,898 | $ - 0 | - 0 | ||||||||||||||||
| Machining + | ||||||||||||||||||
| Assembly | ||||||||||||||||||
| PM | IT | 0 | 0 | 0 | ||||||||||||||
| $ 624,082 | - 0 | - 0 | - 0 | ah X ad | ||||||||||||||
| 240,816 | - 0 | - 0 | - 0 | ai X af | ||||||||||||||
| Functional FOH→ | - 0 | - 0 | - 0 | ab | ||||||||||||||
| $ - 0 | $ - 0 | $ - 0 | ||||||||||||||||
ACC220---HCT---&P of &N---&D, &T---&F, &A
80%
90%
Ch.4 Cost alloc
| ACC302 | |||||||||||||
| Chapter 15 ACC302 /// Chapter 4 ACC220 | |||||||||||||
| Allocation of Costs | |||||||||||||
| HC Tamburro | |||||||||||||
| Single & Dual Rate Methods: | |||||||||||||
| Data Set: #1 | |||||||||||||
| Amount | From | To | |||||||||||
| a | Relevant Range hours | 11,000 | 13,500 | ||||||||||
| b | Master Budget Fixed Manufacturing Costs | $ 3,000,000 | |||||||||||
| c | Practical Capacity | 18,750 | Hours | ||||||||||
| d | Master Budget 2xx1: Peripherals | 8,000 | hours | ||||||||||
| e | Master Budget 2xx1: Microcomputers | 4,000 | hours | ||||||||||
| f | Total Budgeted Hours | 12,000 | hours | ||||||||||
| g | Master Budget Variable OH | $ 200.00 | hour | ||||||||||
| h | Actual 2xx1: Peripherals | 9,000 | |||||||||||
| i | Actual 2xx1: Microcomputers | 3,000 | |||||||||||
| j | Total Actual Hours | 12,000 | |||||||||||
| Single Rate/Single Pool | |||||||||||||
| k | Total Variable OH Budget | $ 2,400,000 | g*f | ||||||||||
| Master Budget Fixed Manufacturing Costs | $ 3,000,000 | +b | |||||||||||
| l | Total Overhead Pool | $ 5,400,000 | + k + i | ||||||||||
| Rate per Hour | |||||||||||||
| m | Microcomputers | $ 450.00 | + l / f | ||||||||||
| n | peripherals | $ 450.00 | + l / f | ||||||||||
| Dual Rate/Single Pool | |||||||||||||
| b | Master Budget Fixed Manufacturing Costs | $ 3,000,000 | |||||||||||
| f | Total Budgeted Hours | 12,000 | |||||||||||
| p | Fixed OH Rate | $ 250.00 | + b / f | ||||||||||
| g | Master Budget Variable OH | $ 200.00 | |||||||||||
| q | Combined Fixed & Variable | $ 450.00 | + p + g | ||||||||||
| Data Set: #2 | |||||||||||||
| Assuming actual = Budget for variable OH rates | |||||||||||||
| Review Fixed OH only | |||||||||||||
| Isolation of change in hours only | |||||||||||||
| Actual hours | |||||||||||||
| Case | 1 | 2 | 3 | ||||||||||
| r | Microcomputers | 8,000 | 8,000 | 8,000 | |||||||||
| s | Peripherals | 4,000 | 7,000 | 2,000 | |||||||||
| t | Totals: | 12,000 | 15,000 | 10,000 | |||||||||
| Master Budget Fixed Manufacturing Costs | $ 3,000,000 | $ 3,000,000 | $ 3,000,000 | b | |||||||||
| Actual Hours @ Total Budget OH | |||||||||||||
| u | Microcomputers | $ 2,000,000 | $ 1,600,000 | $ 2,400,000 | + (r / t) * b | ||||||||
| v | Peripherals | $ 1,000,000 | $ 1,400,000 | $ 600,000 | + (s / t) * b | ||||||||
| b | Total: | $ 3,000,000 | $ 3,000,000 | $ 3,000,000 | + u + v | ||||||||
| Rate per hour | Actual Hours @ Total Budget OH | ||||||||||||
| w | Microcomputers | $ 250.00 | $ 200.00 | $ 300.00 | + u / r | ||||||||
| x | Peripherals | $ 250.00 | $ 200.00 | $ 300.00 | + v / s | ||||||||
| z | Diff: Master Budg. Single Rate | ||||||||||||
| aa | Microcomputers | $ - 0 | $ 50.00 | $ (50.00) | |||||||||
| Peripherals | $ - 0 | $ 50.00 | $ (50.00) | ||||||||||
| ACC 220 Start here | data references from #3 | Maintenance | IT | ||||||||||
| Data Set: #3 | Production Only | 2,400 | 1600 | 88.9% | |||||||||
| Support Departments | Operating Departments | 4,000 | 2,400 | 37.5% | 200 | 11.1% | |||||||
| Maintenance | IT Support | Machining | Assembly | Total: | 6,400 | 4,000 | 62.5% | 1800 | |||||
| ab | Functional Spending $s | $ 600,000 | $ 116,000 | $ 400,000 | $ 200,000 | $ 1,316,000 | |||||||
| ac | Units: Hours | 1,600 | 2,400 | 4,000 | 8,000 | Production Hrs. | |||||||
| ad | % | 20.0% | 30.0% | 50.0% | 100.0% | ||||||||
| Without support functions | 0.0% | 37.5% | 62.5% | $ 600,000 | 225000 | 37.5% | Maintenance | ||||||
| $ 116,000 | 103111 | 88.9% | IT Support | ||||||||||
| ae | Computer Hours | 200 | 1600 | 200 | 2,000 | 328111 | |||||||
| af | % | 10.0% | 80.0% | 10.0% | 100.0% | ||||||||
| Without support functions | 88.9% | 11.1% | $ 600,000 | $ 375,000 | 62.5% | ||||||||
| without service to service | $ 116,000 | $ 12,889 | 11.1% | ||||||||||
| Data Set: #4 | 387889 | ||||||||||||
| Direct Method of Overhead Allocation | |||||||||||||
| Allocate from Support direct to operating | |||||||||||||
| ag | Total Operating depts. Hours | 6,400 | ac operating depts. | ||||||||||
| ah | support cost-rate per hour | Maintenance | $ 93.75 | + 'ab' Maint. / 'ac' opera. hours | |||||||||
| ai | support cost-rate per hour | Assembly | 64.44 | + 'ab' IT. / 'ac' opera. hours | |||||||||
| Maintenance | IT Support | ||||||||||||
| Allocated support costs | Maintenance | IT Support | $ 600,000 | $ 600,000 | $ 116,000 | $ 116,000 | |||||||
| aj | Machining | 225,000 | 103,111 | + ac opera * ah , ai | 37.5% | 62.5% | 88.9% | 11.1% | |||||
| ak | Assembly | 375,000 | 12,889 | + ac mach * ah , ai | $ 225,000 | $ 375,000 | $ 103,111 | $ 12,889 | |||||
| al | Total | 600,000 | 116,000 | Machining | Assembly | Machining | Assembly | ||||||
| Direct Fixed OH costs | Direct | Allocated | Total | Rate | Maintenance | IT Support | SUM | ||||||
| az | +ab + aj | Machining | 400,000 | 328,111 | 728,111 | $ 303.38 | 225,000 | 103,111 | 328,111 | ||||
| ax | +ab + ak | Assembly | 200,000 | 387,889 | 587,889 | $ 146.97 | 375,000 | 12,889 | 387,889 | ||||
| aw | + az + ax | Total | 600,000 | 716,000 | 1,316,000 | ||||||||
| Step Down Method of Overhead Allocation | allocate service to service // set hierarchy | ||||||||||||
| Maintenance is deemed Step 1 or higher in hierarchy for allocation | |||||||||||||
| Support Departments | Operating Departments | ||||||||||||
| Maintenance | IT Support | Machining | Assembly | Total: | |||||||||
| ac | Hours work done by maint. | 1,600 | 2,400 | 4,000 | 8,000 | ||||||||
| ad | % | 20.0% | 30.0% | 50.0% | 100.0% | $ 600,000 | Maintenance | ||||||
| $ (120,000) | to IT | 20.0% | |||||||||||
| ae | IT base = Computer Hours | 200 | 1600 | 200 | 2,000 | $ 480,000 | M to Prodn | ||||||
| af | % | 10.0% | 80.0% | 10.0% | 100.0% | ||||||||
| Funtion spending above | |||||||||||||
| ab | Functional Spending $s | $ 600,000 | $ 116,000 | $ 400,000 | $ 200,000 | $ 1,316,000 | $ 600,000 | 30.0% | Machining | $ 180,000 | |||
| Maint to prodn. | $ 600,000 | 50.0% | Assembly | $ 300,000 | |||||||||
| ac From Maint. To all Functions | $ 120,000 | $ 180,000 | $ 300,000 | $ 600,000 | + ab Maint. ad % | ||||||||
| ad | Subtotal: | $ 236,000 | $ 580,000 | $ 500,000 | $ 1,316,000 | ||||||||
| ae | Operating % of IT | 88.9% | 11.1% | 100.0% | af w/out Maint.% | $ 236,000 | $ 236,000 | ||||||
| af | From IT to Opera. Depts. | $ 209,778 | $ 26,222 | $ 236,000 | + af * ad IT | Prod. Only % | 88.9% | 11.1% | |||||
| From IT after alloc from M | $ 209,778 | $ 26,222 | |||||||||||
| ag | Total: | $ 789,778 | $ 526,222 | $ 1,316,000 | + af + ag | Machining | Assembly | ||||||
| 80%/90% | 10%/90% | ||||||||||||
| Reciprocal Method | |||||||||||||
| Function A: with reciprocal allocation of OH | Function A = Maintenance | ||||||||||||
| Function B = IT | |||||||||||||
| Function A with reciprocal allocation = | |||||||||||||
| Function A Spending + (Function A % usage of Function B X Function B Spending) | |||||||||||||
| Maintenance = | $600000 + (10% X IT) | ||||||||||||
| IT = | $116000 + (20% X Maintenance) | IT = ($116000 + (20% X Maintainance)) | |||||||||||
| Maintenance = | $600000 + 10% X ($116000 + (20% X Maintainance)) | ||||||||||||
| $600000 + 10% X $116000 + 10% X (20% X Maintenance) | |||||||||||||
| $600000 + $116000 + 2% X Maintanance | |||||||||||||
| 98% Maintenance = | $600000 + $11600 | ||||||||||||
| 98% Maintenance = | $600000 + $11600 | ||||||||||||
| 98% Maintenance = | $611,600 | ||||||||||||
| ah | 100% Maintenance = | $ 624,082 | |||||||||||
| IT = $116000 +20%*PM | |||||||||||||
| IT = $116000 +20%*$624082 | Reciprocal | Budget | Allocated | ||||||||||
| ai | IT = $116000 + $124816 | $ 624,082 | $ 600,000 | 499,265 | |||||||||
| IT = | $ 240,816 | $ 240,816 | $ 116,000 | 216,734 | |||||||||
| $ 864,898 | $ 716,000 | 716,000 | |||||||||||
| Machining + | |||||||||||||
| Assembly | |||||||||||||
| PM | IT | Machining | Assembly | Total: | |||||||||
| $ 624,082 | 187,224 | 312,041 | 499,265 | ah X ad | |||||||||
| 240,816 | 192,653 | 24,082 | 216,734 | ai X af | |||||||||
| Functional FOH→ | 400,000 | 200,000 | 600,000 | ab | |||||||||
| $ 779,877 | $ 536,122 | $ 1,316,000 | |||||||||||
| Comparison of Methods | Machining + | ||||||||||||
| Assembly | |||||||||||||
| Machining | Assembly | Total: | |||||||||||
| Direct Method of Overhead Allocation | 728,111 | 587,889 | 1,316,000 | ||||||||||
| Step Down Method of Overhead Allocation | 789,778 | 526,222 | 1,316,000 | ||||||||||
| Reciprocal Method | 779,877 | 536,122 | 1,316,000 | ||||||||||
| Incremental Cost Allocation | |||||||||||||
| Identify primary use | |||||||||||||
| Identify secondary use | |||||||||||||
| Aloocate primary amount of cost to primary use | |||||||||||||
| Allocate incrment over primary to secondary | |||||||||||||
| Value @ cost | Tons | ||||||||||||
| Extract Aluminum fro Ore | 12,000,000 | 24,000,000 | |||||||||||
| Gold is extracted as well | 1,200,000 | 0.0536 | |||||||||||
| Total cost to extract | 6,100,000 | ||||||||||||
| Withuot extracting Gold | 6,000,000 | ||||||||||||
| Incremental cost assigned to gold | 100,000 |
ACC220---Ch. 4---HCT---&P of &N---&D,&T---&F,&A
80%
90%
Ch.4 Proc.Cost2 NOT used
| Ch.4 Process cost | ||||||||||||||||||
| Weighted Average Inventory Valuation Method (FIFO Average) | ||||||||||||||||||
| Department: SMD | Materials | Conversion = DL + Variable Overhead | Total $ | |||||||||||||||
| Units | $ | % complete | Equiv. Units | Units | $ | % complete | Equiv. Units | |||||||||||
| Beginning | 200 | $9,600 | 55% | 110 | 200 | $5,575 | 30% | 60 | $15,175 | |||||||||
| Started | 5000 | $368,600 | 5000 | $350,900 | $719,500 | |||||||||||||
| Completed | 4800 | 100% | 4800 | 100% | 4800 | |||||||||||||
| Ending | 400 | 40% | 160 | 400 | 25% | 100 | ||||||||||||
| Equivalent Production | 4960 | 4900 | ||||||||||||||||
| Total $ for Wghtd. Avgr. inventory valuation | $378,200 | $356,475 | $734,675 | |||||||||||||||
| Per unit | 76.25 | $ 72.75 | ||||||||||||||||
| To next department | 4800 | $366,000 | 100% | 4,800 | 4800 | $349,200 | 100% | 4,800 | $715,200 | |||||||||
| Ending WIP for SMD | 400 | $12,200 | 40% | 160 | 400 | $7,275 | 25% | 100 | $19,475 | |||||||||
| $378,200 | 4,960 | $356,475 | 4,900 | $734,675 | ||||||||||||||
| FIFO: | ||||||||||||||||||
| Department: SMD | Materials | Conversion = DL + Variable Overhead | Total $ | |||||||||||||||
| Units | $ | % complete | Equiv. Units | Units | $ | % complete | Equiv. Units | |||||||||||
| Beginning | 200 | $9,600 | 55% | 110 | 200 | $5,575 | 30% | 60 | $15,175 | |||||||||
| Started | 5000 | $368,600 | 5000 | $350,900 | $719,500 | |||||||||||||
| Completed | 4800 | 100% | 4800 | 100% | 4800 | |||||||||||||
| Started & completed this period | 4600 | 100% | 4600 | 4600 | 100% | 4600 | 90 | 4600 | 160 | 4850 | ||||||||
| Ending | 400 | 40% | 160 | 400 | 25% | 100 | ||||||||||||
| Equivalent Production | 4850 | 4840 | 4600 | 160 | 200 | -110 | 4850 | |||||||||||
| Total $ for FIFO | $368,600 | $350,900 | $719,500 | |||||||||||||||
| Per unit | $ 76.00 | $ 72.50 | ||||||||||||||||
| To next department | 4800 | $366,040 | 100% | 4,800 | 4800 | $349,225 | 100% | 4,800 | $715,265 | |||||||||
| Ending WIP for SMD | 400 | $12,160 | 40% | 160 | 400 | $7,250 | 25% | 100 | $19,410 | |||||||||
| $378,200 | 4,960 | $356,475 | 4,900 | $734,675 | ||||||||||||||
| FIFO: | ||||||||||||||||||
| Weighted Average | 400 | $12,200 | 40% | 160 | 400 | $7,275 | 25% | 100 | $19,475 | |||||||||
| FiFO | 400 | $12,160 | 40% | 160 | 400 | $7,250 | 25% | 100 | $19,410 | |||||||||
| $12,160 | ||||||||||||||||||
| 349600 | ||||||||||||||||||
| $361,760 | ||||||||||||||||||
| Conversion Costs Transferred OUT: | ||||||||||||||||||
| Weighted Average: | ||||||||||||||||||
| Beginnig Costs | 5,575 | |||||||||||||||||
| Period Costs | 350,900 | |||||||||||||||||
| Total | 356,475 | |||||||||||||||||
| Equivalent units | 4,900 | |||||||||||||||||
| per Equivalent Unit | $ 72.75 | |||||||||||||||||
| Completed: To next Department or FG | 4,800 | 349,200 | ||||||||||||||||
| Ending in Department | 400 = 100 Eq.units | 7,275 | ||||||||||||||||
| 356,475 | ||||||||||||||||||
| FIFO | ||||||||||||||||||
| Beginnig Costs | 5,575 | to next department | ||||||||||||||||
| Period Costs | 350,900 | |||||||||||||||||
| Total | 356,475 | |||||||||||||||||
| Period equivalent units | 4,840 | [period cost] | ||||||||||||||||
| per Equivalent Unit | $ 72.50 | |||||||||||||||||
| Completed: To next Department or FG | t6 | |||||||||||||||||
| Started & completed | 4,600 | 333,500 | ||||||||||||||||
| compltion of beginning | 140 | 10,150 | ||||||||||||||||
| Ending in Department | 400 = 100 Eq.units | 7,250 | ||||||||||||||||
| 350,900 | ||||||||||||||||||
| to next department | ||||||||||||||||||
| Beginning $ | 5,575 | |||||||||||||||||
| Perod completion | ||||||||||||||||||
| Started & completed | 333,500 | |||||||||||||||||
| Beginning completed | 10,150 | 343,650 | ||||||||||||||||
| 349,225 | ||||||||||||||||||
| per unit = | $ 72.76 | |||||||||||||||||
| Transferred out + Ending = | 356,475 | |||||||||||||||||
| Ch.4 Process cost | BOARD | |||||||||||||||||
| Weighted Average Inventory Valuation Method (FIFO Average) | ||||||||||||||||||
| Department: ACC220 | Materials | Conversion = DL + Variable Overhead | Total $ | |||||||||||||||
| Dept.A to Dept. B | Units | $ | % complete | Equiv. Units | Units | $ | % complete | Equiv. Units | 1100 | End | ||||||||
| 6500 | 100% | |||||||||||||||||
| Beginning | 600 | $10,000 | 60% | 360 | 600 | $6,000 | 40% | 240 | $16,000 | 7600 | ||||||||
| to | ||||||||||||||||||
| Started Dept. A | 7000 | $120,000 | 7000 | $105,000 | $225,000 | acct. for | ||||||||||||
| Completed | 6500 | 100% | 6500 | 100% | 6500 | Completed | 6500 | |||||||||||
| Ending | 1100 | 70% | 770 | 1100 | 30% | 330 | End | 1100 | ||||||||||
| Equivalent Production | 7270 | 6830 | ||||||||||||||||
| Total $ for Wghtd. Avgr. inventory valuation | $130,000 | Beginning + started $s | $111,000 | $241,000 | ||||||||||||||
| Per unit | $ 17.88 | $ 16.25183 | 17.8817056396 | 16.2518301611 | ||||||||||||||
| To next department | 6500 | $116,231 | 100% | 6,500 | 6500 | $105,637 | 100% | 6,500 | $221,868 | |||||||||
| Ending WIP for ACC220 | 1100 | $13,769 | 70% | 770 | 1100 | $5,363 | 30% | 330 | $19,132 | |||||||||
| $130,000 | 7,270 | $111,000 | 6,830 | $241,000 | ||||||||||||||
| FIFO: | ||||||||||||||||||
| Department: ACC220 | Materials | Conversion = DL + Variable Overhead | Total $ | using same begininng | ||||||||||||||
| Units | $ | % complete | Equiv. Units | Units | $ | % complete | Equiv. Units | balance as an example | ||||||||||
| Beginning | 600 | $ 10,000 | 60% | 360 | 600 | $ 6,000 | 40% | 240 | $16,000 | Conver- sion | 360 | Beg | ||||||
| Started Dept. A | 7000 | $ 120,000 | 7000 | $105,000 | $225,000 | 5900 | 100% | |||||||||||
| Completed | 6500 | 100% | 6500 | 100% | 6500 | 6590 | 330 | End | ||||||||||
| Started & completed this period | 5900 | 100% | 5900 | 5900 | 100% | 5900 | work done in period only | |||||||||||
| Ending | 1100 | 70% | 770 | 1100 | 30% | 330 | Matls | 240 | Beg | |||||||||
| Equivalent Production | 6910 | 6590 | 5900 | 100% | ||||||||||||||
| Total $ for FIFO | $120,000 | Started $s only | $105,000 | $225,000 | 770 | End | ||||||||||||
| Per unit | $ 17.37 | $ 15.93 | 6910 | |||||||||||||||
| To next department | 6500 | $116,628 | 100% | 6,500 | 6500 | $105,742 | 100% | 6,500 | $222,370 | |||||||||
| Ending WIP for ACC220 | 1100 | $13,372 | 70% | 770 | 1100 | $5,258 | 30% | 330 | $18,630 | |||||||||
| $130,000 | 7,270 | $111,000 | 6,830 | $241,000 | ||||||||||||||
| FIFO: | ||||||||||||||||||
| Weighted Average | 1100 | $13,769 | 70% | 770 | 1100 | $5,363 | 30% | 330 | $19,132 | |||||||||
| FiFO | 1100 | $13,372 | 70% | 770 | 1100 | $5,258 | 30% | 330 | $18,630 | |||||||||
| B | + | A | - | E | = | TRANSFERRED | ||||||||||||
| WA | $ 10,000 | $ 120,000 | ($13,769) | $116,231 | ||||||||||||||
| FIFO | $ 10,000 | $ 120,000 | ($13,372) | $116,628 | ||||||||||||||
| ME JE | ||||||||||||||||||
| Dr. WIP Dept.B | ||||||||||||||||||
| Cr. WIP Dept.A |
ACC220---HCT----&P of &N---&D,&T---&F,&A
Ch.4ProcCost1
| Chapter 4 | |||||
| Process Costing | HSO TOY COMPANY | ||||
| Data Set: | |||||
| RawMaterial | DirectLabor | Mfg.OverHead | Total | ||
| Beginning Inventory | $10,000 | $1,060 | $1,620 | $12,680 | |
| Units | 10,000 | 10,000 | 10,000 | 10,000 | |
| % complete | 100% | 30% | 40% | ||
| Equivalent units | 10,000 | 3,000 | 4,000 | ||
| Units started in period | 40,000 | 40,000 | 40,000 | 40,000 | |
| Units completed in period | 44,000 | 44,000 | 44,000 | 44,000 | |
| Cost incurred in period | $44,000 | $22,440 | $43,600 | $110,040 | |
| Units to be accounted for = Beg + started | 50,000 | 50,000 | 50,000 | 50,000 | |
| Ending Inventory | 6,000 | 6,000 | 6,000 | 6,000 | |
| % complete | 100% | 50% | 60% | ||
| Equivalent units | 6,000 | 3,000 | 3,600 | ||
| A. Ending Inventory Value using Weighted Average | |||||
| Use Beginning Inventory + Period costs | |||||
| RM | DL | MOH | Total | ||
| Beginning Inventory | $10,000 | $1,060 | $1,620 | $12,680 | |
| Cost incurred in period | $44,000 | $22,440 | $43,600 | $110,040 | |
| Beginning + Period $s = Ending Inventory $s | $54,000 | $23,500 | $45,220 | $122,720 | |
| Completed units @ 100% | 44,000 | 44,000 | 44,000 | ||
| Ending Inventory Equivalent units | 6,000 | 3,000 | 3,600 | ||
| Total Beg. + Period equivalent units | 50,000 | 47,000 | 47,600 | ||
| Cost per Equivalent unit | $1.08 | $0.50 | $0.95 | $2.53 | |
| for units to next area | |||||
| Ending Equivalent units | 6,000 | 3,000 | 3,600 | ||
| Ending inventory value | $6,480 | $1,500 | $3,420 | $11,400 | |
| A. Ending Inventory Value using FIFO | |||||
| Use Beginning Inventory + Period costs | |||||
| RM | DL | MOH | Total | ||
| Beginning inventory Units | 10,000 | 10,000 | 10,000 | ||
| Beginning inventory: Equivalent units | 10,000 | 3,000 | 4,000 | ||
| Period work to complete Beginning units | 0% | 70% | 60% | ||
| Period equivalent units production | |||||
| to complete beginning inventory | 0 | 7,000 | 6,000 | ||
| Units started | 40,000 | 40,000 | 40,000 | ||
| Units completed | 44,000 | 44,000 | 44,000 | ||
| Completed & started in period [less beginning] | 34,000 | 34,000 | 34,000 | ||
| = equivalent units for period completed | 34,000 | 34,000 | 34,000 | ||
| Ending Inventory | 6,000 | 6,000 | 6,000 | ||
| % complete | 100% | 50% | 60% | ||
| Equivalent Enduing units | 6,000 | 3,000 | 3,600 | ||
| Work done in Period in Equivalent units | |||||
| Beginning | 0 | 7,000 | 6,000 | ||
| Started & completed in period | 34,000 | 34,000 | 34,000 | ||
| Ending Equivalent units | 6,000 | 3,000 | 3,600 | ||
| Total Equivalent work in period | 40,000 | 44,000 | 43,600 | ||
| Cost incurred in period | $44,000 | $22,440 | $43,600 | $110,040 | |
| FIFO cost per equivalent unit | $1.10 | $0.51 | $1.00 | $2.61 | |
| Ending Inventory value [ Eq. Units x cost/ea.] | $6,600 | $1,530 | $3,600 | $11,730 |
ACC220--Ch. 4---&P of &N---&D,&T---&F,&A---HCT
Ch5 Base Case
| k | ||||||||||||
| A | RBC Company | |||||||||||
| Item | ||||||||||||
| 1. | Planned Base Sales$s = P X Q | |||||||||||
| 2. | Variable costs & expenses $s= Q X b. | |||||||||||
| 3. | CM $s = contribution $s = 1.-2. | |||||||||||
| 4. | Fixed costs & expenses [given data] | |||||||||||
| 5. | 3.-4. = Planned Operating Income | |||||||||||
| CMu P | $500.00 | P | $500.00 | |||||||||
| Sell price per unit | $500.00 | P | X b. | -$300.00 | CMu | $200.00 | ||||||
| Variable costs & expenses per unit | $300.00 | b. | =CMu | $200.00 | = CM% | 40.0% | ||||||
| CMu = Contribution margin per unit | $200.00 | C. = P-b | ||||||||||
| Planned Base case Quantity | 500 | Q. | Sales$s | $500.00 | BE Qty. | |||||||
| Planned Base Sales$s | $250,000 | e. = P X Q | X | 500 | Fixed | $80,000 | ||||||
| Variable costs & expenses $s | $150,000 | bx = b X Q | = | $250,000 | / CMu | $200.00 | ||||||
| CM $s = contribution $s | $100,000 | CM$s = e - bx OR CMu. X Q | BE Qty. | 400 | ||||||||
| CM % = Contributiin ratio = Contribution % | 40.0% | CM% = CMu/a. OR CM$s/e. | Var. cost $ | 500 | ||||||||
| X | $300.00 | Safety Margin Units | ||||||||||
| Fixed costs & expenses | $80,000 | Fxd. | = | $150,000 | Op. Inc. | $20,000 | ||||||
| Breakeven: Qty. (Units) = BE Qty | 400 | BE Qty= Fxd/CMu | / CMu | $200.00 | ||||||||
| Breakeven: Sales$s | $200,000 | BE Sales$ = BE Qty X P -OR- Fxd/ CM% | Safety Q | 100 | ||||||||
| Safety Margin $s | $50,000 | s1. = Sales $s-BE Sales$ | Var. cost $ | $300.00 | ||||||||
| Safety Qty. Margin Units | 100 | s2. = Q.- BE Qty | X | $500 | Leverage ratio | |||||||
| = | $150,000 | CM$s | $100,000 | |||||||||
| Operating Income [above] | $20,000 | / Op. Inc. | $20,000 | |||||||||
| Leverage Ratio | 5.00 | CM$ / Operating Income | 1% ∆ CM | Ratio | 5.00 | |||||||
| = 5% ∆ Op.Income | ||||||||||||
| Ratio = 5 | ||||||||||||
| B | Base Case | CH.5 PPT | ||||||||||
| a | SP unit | $500 | ||||||||||
| b | Var.cost per unit | $300 | ||||||||||
| c1 | CM$/unit | $200 | a-b | per unit | ||||||||
| c2 | CM% | 40.0% | c1 / a | CM% | ||||||||
| Fixed costs | ||||||||||||
| d | Manufacturing | $50,000 | ||||||||||
| e | S&A | $30,000 | ||||||||||
| f | Total Fxd | $80,000 | d+e | |||||||||
| g | Sales Budget [Base] | 500 | units | |||||||||
| C | h | Profit [contribution format IS [NOT GAAP}] at Target = | Budget = Base Case | |||||||||
| per unit | $s | |||||||||||
| i | Sales | $500 | $ 250,000 | |||||||||
| j | Variable costs & Expense | $300 | $ 150,000 | |||||||||
| k | Contribution margin | $200 | $ 100,000 | +$200/$500=40% | CM% Contrib ratio $s | |||||||
| l | Fixed expenses | $80,000 | $100,000/$250,000=40% | |||||||||
| m | Net income [Operating Income] | $20,000 | ||||||||||
| D | ||||||||||||
| $250,000 | ||||||||||||
| $450,000 | ||||||||||||
| Using CM% | Using CMu | $200,000 | more | |||||||||
| Fixed costs & expenses | $80,000 | $180,000 | to go from $20000 to $100000 | |||||||||
| +Target Profit | $100,000 | CMu | $200.00 | profit | ||||||||
| Sunm to be covered by Sales | $180,000 | Qty | 900 | change in profit | 80,000 | |||||||
| P | $500.00 | at 40% CM% | 40.0% | |||||||||
| +CM% | 40.0% | $450,000 | change in sales $ | 200000 | ||||||||
| Target Sales | $450,000 | Target Sales | per unit | $500 | ||||||||
| Change in unts | 400 | |||||||||||
| base | 500 | |||||||||||
| Needed Qty | 900 | |||||||||||
| E | ||||||||||||
| Quantity | 150 | Target Profit | $3,000 | |||||||||
| Profit needed per unit | $20.00 | |||||||||||
| Variable costs & expenses per unit | $300.00 | |||||||||||
| Price neede to achieve desired profit | $320.00 | |||||||||||
Ch.5 CVP PPT
| A | Base Case | CH.5 PPT | |||||||||||||||
| a | SP unit | $500 | |||||||||||||||
| b | Var.cost per unit | $300 | |||||||||||||||
| c1 | CM$/unit | $200 | a-b | per unit | |||||||||||||
| c2 | CM% | 40.0% | c1 / a | CM% | |||||||||||||
| Fixed costs | |||||||||||||||||
| d | Manufacturing | $50,000 | |||||||||||||||
| e | S&A | $30,000 | |||||||||||||||
| f | Total Fxd | $80,000 | d+e | ||||||||||||||
| g | Sales Budget [Base] | 500 | units | ||||||||||||||
| B | h | Profit [contribution format IS] at Target = | Budget = Base Case | ||||||||||||||
| per unit | $s | % | |||||||||||||||
| i | Sales | $500 | $ 250,000 | g X a | 100.0% | i / i | |||||||||||
| j | Variable costs & Expense | $300 | $ 150,000 | g X b | 60.0% | j / i | |||||||||||
| k | Contribution margin | $200 | $ 100,000 | I - j | 40.0% | k / i | +$200/$500=40% | CM% Contrib ratio $s | |||||||||
| l | Fixed expenses | $80,000 | f | 32.0% | l / i | $100,000/$250,000=40% | |||||||||||
| m | Net income [Operating Income] | $20,000 | k - l | 8.0% | m / i | ||||||||||||
| Back to PPT slide | |||||||||||||||||
| What IF | |||||||||||||||||
| C1 | n | What IF #1 | |||||||||||||||
| o | Sales up | 40 | units | Adv. Up | $10,000 | 40 | 540 | ||||||||||
| Profit [contribution format IS] at What if #1 Qty. | 500 | $500 | |||||||||||||||
| 540 | per unit | $s | % | 540 | $270,000 | ||||||||||||
| units | Sales | $500 | $ 270,000 | [was $250K] | 100.0% | i / i | 500 | 40 | Qty | ||||||||
| Variable costs & Expense | $300 | $ 162,000 | 60.0% | j / i | 540 | ||||||||||||
| Contribution margin | $200 | $ 108,000 | 40.0% | k / i | CM% | $300 | |||||||||||
| Fixed expenses | $90,000 | [was 80,000] | 33.3% | l / i | $80,000 | $10,000 | Fxd. Exp | $162,000 | |||||||||
| p | Net income [Operating Income] | $18,000 | [was 20,000] | 6.7% | m / i | ||||||||||||
| 40 | units | Net change | Adv. Up | $10,000 | Net change from the Base Case | Add Adv. | |||||||||||
| q | Net Change profit Incr/(Decr) | CMu X 40 | $8,000 | ($2,000) | ($10,000) | m - p | |||||||||||
| What IF | |||||||||||||||||
| C2 | |||||||||||||||||
| What IF #2 | |||||||||||||||||
| r | Sales up | 80 | units | Var.cost/unit | $10 | ||||||||||||
| Profit [contribution format IS] at What if #2 Qty. | |||||||||||||||||
| per unit | $s | % | |||||||||||||||
| Sales | $500 | $ 290,000 | 100.0% | 500 | 80 | Qty | |||||||||||
| b + o | Variable costs & Expense | $310 | $ 179,800 | [was $300] | 62.0% | $300 | $10 | $310 | |||||||||
| Contribution margin | $190 | $ 110,200 | 38.0% | CM% | 580 | ||||||||||||
| Fixed expenses | $80,000 | 27.6% | $179,800 | ||||||||||||||
| s | Net income [Operating Income] | $30,200 | 10.4% | ||||||||||||||
| 80 | units | Net change | Var.cost/unit | $10 | |||||||||||||
| t | Net Change profit Incr/(Decr) | $200 | $16,000 | $10,200 | ($5,800) | p - q | 580X$10 | ||||||||||
| $200 X 80 | o X c1 | o[$s] X (o[qty]+g | Net change from the Base Case | ||||||||||||||
| What IF | |||||||||||||||||
| C3 | What IF #3 | Qty | AP∆ | Adv. Up | |||||||||||||
| u | Sales up | 150 | units | Sp down | $20 | Adv. Up | $15,000 | ||||||||||
| Profit [contribution format IS] at What if #3 Qty. | |||||||||||||||||
| per unit | $s | % | |||||||||||||||
| Sales | $480 | $ 312,000 | [was $500] | 100.0% | 500 | 150 | Qty | 650 | |||||||||
| Variable costs & Expense | $300 | $ 195,000 | 62.5% | $500 | ($20) | SP unit | $ 480.00 | ||||||||||
| Contribution margin | $180 | $ 117,000 | 37.5% | CM% | $ 312,000 | ||||||||||||
| Fixed expenses | $95,000 | [was $80,000] | 30.4% | $80,000 | $15,000 | Fxd Exp | |||||||||||
| v | Net income [Operating Income] | $22,000 | 7.1% | $95,000 | |||||||||||||
| $480 | |||||||||||||||||
| 150 | units | Net change | Sp down | Adv up[ | 650 X $20 | ($13,000) | ($300) | 650 | |||||||||
| w | Net Change profit Incr/(Decr) | 150 X $200 | $30,000 | $2,000 | ($13,000) | ($15,000) | Adv. Up | $180 | 117000 | ||||||||
| r X c1 | [r qty+ g] X r ∆SP | Net change from the Base Case | |||||||||||||||
| What IF | |||||||||||||||||
| C4 | 500 | 75 | 575 | $500 | |||||||||||||
| What IF #4 | Qty | Commissions∆ | Fxd Exp | $287,500 | |||||||||||||
| x | Sales up | 75 | units | Comm.unité | $15 | Fxd Expê | $6,000 | ||||||||||
| Profit [contribution format IS] at What if #3 Qty. | 500 | 75 | Qty | 575 | |||||||||||||
| per unit | $s | % | $300 | $15 | Var.cost-Exp | $315 | |||||||||||
| Sales | $500 | $ 287,500 | 100.0% | $181,125 | |||||||||||||
| Variable costs & Expense | $315 | $ 181,125 | [was $300] | 63.0% | |||||||||||||
| Contribution margin | $185 | $ 106,375 | 37.0% | CM% | |||||||||||||
| Fixed expenses | $74,000 | [was $80K] | 25.7% | $80,000 | ($6,000) | Fxd | $74,000 | ||||||||||
| y | Net income [Operating Income] | $32,375 | 11.3% | ||||||||||||||
| Net Change profit Incr/(Decr) | 75 | units | Net change | Comm.unité | Fxd Expê | ||||||||||||
| $15,000 | $12,375 | $ (8,625) | $6,000 | ||||||||||||||
| 75X$200 | 575X$15 | Net change from the Base Case | |||||||||||||||
| Back to slide 22 | |||||||||||||||||
| Breakeven: | |||||||||||||||||
| D | Equation Method | ||||||||||||||||
| Breakeven Units: | Breakeven$s | ||||||||||||||||
| Total Fxd | $80,000 | BE units | 400 | ||||||||||||||
| divide | CM$/unit | $200 | SP unit | $500 | |||||||||||||
| BE units | 400 | BE Revenue | $ 200,000 | ||||||||||||||
| OR | 12000 | ||||||||||||||||
| 65000 | |||||||||||||||||
| Total Fxd | $ 80,000 | 21600 | |||||||||||||||
| CM% | 40.0% | Contribution Margin Method | 98600 | ||||||||||||||
| BE Revenue | $ 200,000 | ||||||||||||||||
| 526524 | |||||||||||||||||
| Proof: Profit= -0- | per unit | $s | 5.34 | ||||||||||||||
| Sales | $500 | $ 200,000 | at 400 units | 100% | |||||||||||||
| Variable costs & Expense | $300 | $ 120,000 | 60% | ||||||||||||||
| Contribution margin | $200 | $ 80,000 | 40% | ||||||||||||||
| Fixed expenses | $80,000 | ||||||||||||||||
| Net income [Operating Income] | $0 | Profit @ zero = Breakeven | |||||||||||||||
| Back to slide 33 | |||||||||||||||||
| Target | |||||||||||||||||
| Target Profit | $ 100,000 | ||||||||||||||||
| CM must cover the fixed expense AND the target profit | |||||||||||||||||
| Data | SP unit | $500 | To have a profit of | $ 100,000 | |||||||||||||
| Set | Var.cost per unit | $300 | Total Fxd | $80,000 | |||||||||||||
| CM$/unit | $200 | Sum | $ 180,000 | Profit + Fxd. Costs & Expenses | |||||||||||||
| CM% | 40.0% | ||||||||||||||||
| CM$/unit | $200 | ||||||||||||||||
| Target Units | 900 | $180000 / $200 | |||||||||||||||
| Manufacturing | $50,000 | @SP/unit | $450,000 | Target revenue $s | |||||||||||||
| S&A | $30,000 | ||||||||||||||||
| Total Fxd | $80,000 | OR | CM% | 40.0% | $180,000 / 40% | ||||||||||||
| $ 450,000 | Target revenue $s | ||||||||||||||||
| Sales Budget [Base] | 500 | Base case | Proof | Target | per unit | $s | |||||||||||
| Sales | $500 | $ 450,000 | 100% | ||||||||||||||
| Variable costs & Expense | $300 | $ 270,000 | 60% | ||||||||||||||
| Contribution margin | $200 | $ 180,000 | 40% | ||||||||||||||
| Fixed expenses | $80,000 | 18% | |||||||||||||||
| Net income [Operating Income] | $100,000 | 22% | |||||||||||||||
| Go to PPT slide 36 | |||||||||||||||||
| 1.49 | |||||||||||||||||
| -0.36 | |||||||||||||||||
| 1.13 | 76% | ||||||||||||||||
| 1300 | |||||||||||||||||
| 1150.4424778761 | |||||||||||||||||
| 1714.1592920354 | |||||||||||||||||
ACC220---HCT---Ch.5 CVP---&P of &N---&D,&T---&F,&A
CH5-MixCVP
| Sales Mix & CVP | Use an Average Uunit | |||||||||||
| Average | Ch.5 CVP | |||||||||||
| Bikes | Carts | Unit | ACC220 | |||||||||
| Units | 500 | 300 | 800 | |||||||||
| Mix: Units | 62.5% | 37.5% | 100.0% | |||||||||
| Dollars | 75.2% | 24.8% | 100.0% | |||||||||
| Per Unit | ||||||||||||
| Sales Price | $ 500.00 | $ 275.00 | $ 415.63 | Weighted average used units | $332,500 | $s | ||||||
| Variable cost per Unit | 800 | Units | ||||||||||
| Direct Materials | $ 200.00 | $ 125.00 | $ 171.88 | Weighted average used units | $ 415.63 | average | ||||||
| Variable LOH | $ 75.00 | $ 60.00 | $ 69.38 | Weighted average used units | ||||||||
| Total variable costs per unit | $ 275.00 | $ 185.00 | $ 241.25 | Sum | $ 200.00 | $ 125.00 | ||||||
| Varable Sales & Admin. Per Unit | $ 25.00 | $ 15.00 | $ 21.25 | Weighted average used units | 500 | 300 | 800 | Units | ||||
| Total Variable Costs & expenses | $ 300.00 | $ 200.00 | $ 262.50 | Sum | $ 100,000 | $ 37,500 | $ 137,500 | $s | ||||
| 171.88 | $s / uynits | |||||||||||
| Contribution margin per unit | $ 200.00 | $ 75.00 | $ 153.13 | Difference | ||||||||
| CM % | 40.0% | 27.3% | 36.8% | |||||||||
| Fixed Manufacturing Costs | $ 30,000 | $ 20,000 | per month | |||||||||
| Fixed S&A Expenses | $ 50,000 | per month | ||||||||||
| Added | ||||||||||||
| P&L Brief (Month) | Bikes | Carts | Total Company | 800 | ||||||||
| Sales | $250,000 | $82,500 | $332,500 | 100.0% | $ 153.13 | |||||||
| Variable Costs & Expenses | $150,000 | $60,000 | $210,000 | 63.2% | ||||||||
| CM $ | $100,000 | $22,500 | $122,500 | 36.8% | $ 122,500 | |||||||
| CM% | 40.0% | 27.3% | 36.8% | 36.842105263158% | ||||||||
| 36.800000000000% | ||||||||||||
| Fixed Costs & Expenses [given] | $ 80,000 | $ 20,000 | $100,000 | 30.1% | ||||||||
| $100,000 | ||||||||||||
| Operating Income | $20,000 | $2,500 | $22,500 | 6.8% | $22,500 | |||||||
| Operating Leverage | 5.00 | 9.00 | 5.44 | 5.44 | 1000000 | |||||||
| 368421.052631579 | ||||||||||||
| Breakeven | ||||||||||||
| Fixed Costs & Expenses | $ 80,000 | $ 20,000 | $ 100,000 | using | Mix % x BE sales $ | $100,000 | Fxd | |||||
| CM% | 40.0% | 27.3% | 36.8% | CM% | 75.2% | 24.8% | 36.8% | Mix CM% | ||||
| Breakeven | $204,082 | $67,347 | $271,429 | Method | $271,429 | $271,429 | $ 271,429 | divide | ||||
| BE $-Mix | 75.2% | 24.8% | 100% | $ 204,082 | $ 67,347 | |||||||
| Bikes | Carts | Bikes | Carts | |||||||||
| Breakeven | 81,633 | 18,367 | 100,000 | $ 204,082 | $ 67,347 | |||||||
| Fixed Costs & Expenses | $ 80,000 | $ 20,000 | $ 100,000 | using | 40.0% | 27.3% | CM % | 40.0% | 27.3% | |||
| CM$ per unit | $ 200.00 | $ 75.00 | $ 153.13 | Units | $81,633 | $18,367 | ||||||
| Breakeven units | 408 | 245 | 653 | Method | 100000 | |||||||
| BE Sales $ | $ 204,000 | $ 67,375 | $ 271,375 | * | 153 | |||||||
| * did not use fractional units would be exactly the same with fractional units | 653.06 | |||||||||||
| Redo | 480 | SP ea. | ||||||||||
| 580 | Sales | 650 | 575 | |||||||||
| 310 | Coad ea | |||||||||||
| 1.49 | 190 | CMu | 180 | 185 | ||||||||
| 1150 | 110200 | CM$s | 117000 | 106375 | ||||||||
| 1713.5 | 80000 | Fxd | 95000 | 74000 | ||||||||
| 30200 | Net inc | 22000 | 32375 | |||||||||
| 20000 | @ 500 Net Inc | 20000 | 20000 | |||||||||
| 1300 | 10200 | Increase | 2000 | 12375 | ||||||||
| 1.13 | ||||||||||||
| 1150.4424778761 | ||||||||||||
| 2100 | ||||||||||||
| 1.49 | ||||||||||||
| 0.36 | ||||||||||||
| Sales | 3129 | 3754.8 | +20% | |||||||||
| V | 756 | 907.2 | +20% | |||||||||
| Cm | 2373 | 2847.6 | +20% | |||||||||
| F | 1300 | 1301 | 0% | |||||||||
| NI | 1073 | 1546.6 | 144.1% | |||||||||
| OL | 2.21 | 44.1% | ||||||||||
ACC220---HCT---&P of &N---&D, &T---&F, &F
1
2
3
1
3
2
1
2
3
Ch.7 ABC
| ACC220 | ||||||||||||||||||||||||||
| Rider University | ||||||||||||||||||||||||||
| HCT--Ch 7.---ABC | ||||||||||||||||||||||||||
| How can we categorize Expense: | ||||||||||||||||||||||||||
| Fixed, variable | ||||||||||||||||||||||||||
| Product & period | ||||||||||||||||||||||||||
| Functional | ||||||||||||||||||||||||||
| Natural | ||||||||||||||||||||||||||
| Job or Project | ||||||||||||||||||||||||||
| this Chapter "Activity Based Costs" = ABC | ||||||||||||||||||||||||||
| Financial Reporting | ||||||||||||||||||||||||||
| Classic Brass | Example #1 | |||||||||||||||||||||||||
| Income Statement Brief [FAC] | ||||||||||||||||||||||||||
| Year Ended December 31, 2xx1 | ||||||||||||||||||||||||||
| Sales | $ 775,000 | |||||||||||||||||||||||||
| Cost of goods sold | 543,300 | |||||||||||||||||||||||||
| Gross Profit [margin] | $ 231,700 | |||||||||||||||||||||||||
| Selling and administrative expenses | 200,585 | |||||||||||||||||||||||||
| Net operating income | $ 31,115 | |||||||||||||||||||||||||
| Categorization of Expense: | Example #1 | |||||||||||||||||||||||||
| Function ►►►► | Sales | Admin | Production | Distribution | Totals: | Variable | Fixed | |||||||||||||||||||
| Direct Materials | 150,000 | 150,000 | 150,000 | - 0 | ||||||||||||||||||||||
| Production Direct labor | - 0 | - 0 | 115,000 | - 0 | 115,000 | 115,000 | - 0 | |||||||||||||||||||
| Salary Expense | 25,000 | 17,000 | 36,000 | 9,000 | 87,000 | 12,000 | 75,000 | |||||||||||||||||||
| Wage Expense | 16,000 | 9,000 | 58,000 | 12,500 | 95,500 | - 0 | 95,500 | |||||||||||||||||||
| Commission expense | 12,000 | 12,000 | 12,000 | - 0 | ||||||||||||||||||||||
| Fringe benefit expense | 13,000 | 8,800 | 74,000 | 6,400 | 102,200 | 51,000 | 51,200 | |||||||||||||||||||
| Travel & entertainment Exp. | 7,000 | 2,600 | 700 | - 0 | 10,300 | 2,000 | 8,300 | |||||||||||||||||||
| Advertising expense | 9,500 | 400 | 750 | 200 | 10,850 | 10,850 | ||||||||||||||||||||
| Natural | Building rent expense | 3,200 | 3,600 | 12,500 | 4,800 | 24,100 | 24,100 | |||||||||||||||||||
| Expense | Equipment lease expense | 400 | 2,300 | 6,900 | 2,230 | 11,830 | 11,830 | |||||||||||||||||||
| Supply expense | 1,900 | 1,400 | 2,300 | 600 | 6,200 | 2,300 | 3,900 | |||||||||||||||||||
| Contract labor Expense | - 0 | - 0 | 34,000 | 3,320 | 37,320 | 34,000 | 3,320 | |||||||||||||||||||
| Warranty services | 3,600 | 450 | 2,000 | 300 | 6,350 | 4,000 | 2,350 | |||||||||||||||||||
| Professional services | 1,900 | 2,150 | 3,200 | - 0 | 7,250 | 7,250 | ||||||||||||||||||||
| Bank charges/fees | - 0 | 200 | - 0 | - 0 | 200 | 200 | ||||||||||||||||||||
| Depreciation expense | 2,200 | 1,975 | 44,000 | 11,000 | 59,175 | 59,175 | ||||||||||||||||||||
| Miscellaneous expense | 1,400 | 1,100 | 3,950 | 2,160 | 8,610 | 215 | 8,395 | |||||||||||||||||||
| Total | 97,100 | 50,975 | 543,300 | 52,510 | 743,885 | 382,515 | 361,370 | |||||||||||||||||||
| Period | Period | PRODUCT | Period | 200,585 | ||||||||||||||||||||||
| 200,585 | ||||||||||||||||||||||||||
| Job ►►►► | Job AB1 | Job AB2 | Job AB3 | Totals | 543,300 | 743,885 | ||||||||||||||||||||
| Salary Expense | 12,000 | 3,000 | - 0 | 15,000 | ||||||||||||||||||||||
| Wage Expense | 2,300 | 6,200 | - 0 | 8,500 | ||||||||||||||||||||||
| Production Direct labor | 21,000 | 23,000 | 66,000 | 110,000 | ||||||||||||||||||||||
| Fringe benefit expense | 6,500 | 9,100 | 2,200 | 17,800 | ||||||||||||||||||||||
| Commission expense | 2,500 | - 0 | 1,300 | 3,800 | ||||||||||||||||||||||
| Advertising expense | - 0 | - 0 | - 0 | - 0 | ||||||||||||||||||||||
| Building rent expense | - 0 | - 0 | - 0 | - 0 | ||||||||||||||||||||||
| Equipment lease expense | - 0 | - 0 | 2,150 | 2,150 | ||||||||||||||||||||||
| Office supply expense | - 0 | - 0 | - 0 | - 0 | ||||||||||||||||||||||
| Contract labor Expense | 1,500 | 2,650 | 11,500 | 15,650 | ||||||||||||||||||||||
| Travel/entertainment exp. | 250 | 350 | 600 | 1,200 | ||||||||||||||||||||||
| Professional services | 1,110 | 850 | 1,950 | 3,910 | ||||||||||||||||||||||
| Bank charges/fees | - 0 | - 0 | - 0 | - 0 | ||||||||||||||||||||||
| Depreciation expense | - 0 | - 0 | - 0 | - 0 | ||||||||||||||||||||||
| Miscellaneous expense | 875 | 625 | 325 | 1,825 | ||||||||||||||||||||||
| Totals: | 48,035 | 45,775 | 86,025 | 179,835 | Not all assigned to jobs | |||||||||||||||||||||
| Categorization of Expense: Functional: | ||||||||||||||||||||||||||
| Examples of Functional Areas | ||||||||||||||||||||||||||
| Manufacturing | Sales & Marketing | General & Administrative | ||||||||||||||||||||||||
| Mfg. Admin. | Sales Admin | Office of CEO | ||||||||||||||||||||||||
| Process Engineering | Field sales | Finance | ||||||||||||||||||||||||
| Warehouse' | Product development | Human Resources | ||||||||||||||||||||||||
| Material handling | Advertising | General Counsel [legal] | ||||||||||||||||||||||||
| Testing | Distribution/warehouse | |||||||||||||||||||||||||
| Quality Assurance & control | ||||||||||||||||||||||||||
| Purchasing [Plant Level] | ||||||||||||||||||||||||||
| Line Supervision | Operations; [non-manufacturing] | |||||||||||||||||||||||||
| Equipment maintenance | Operations Admin | |||||||||||||||||||||||||
| Plant Human Resources | Corporate purchasing | |||||||||||||||||||||||||
| Plant maintenance | ||||||||||||||||||||||||||
| Many others - can vary by company | ||||||||||||||||||||||||||
| Excel A | ||||||||||||||||||||||||||
| Baxter Battery Company | ||||||||||||||||||||||||||
| Income Statement | GAAP | |||||||||||||||||||||||||
| Year Ended December 31, 2xx1 | ||||||||||||||||||||||||||
| Sales | 50,000,000 | |||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||
| Direct | Direct materials | 15,000,000 | ||||||||||||||||||||||||
| Direct | Direct labor | 12,000,000 | ||||||||||||||||||||||||
| Manufacturing overhead | 14,000,000 | 41,000,000 | no change in inventory | |||||||||||||||||||||||
| Gross margin [Gross Profit] | 9,000,000 | |||||||||||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||||||||||||
| Direct | Shipping expenses | 3,000,000 | Each product line has its own warehouse - shipping charges are freight & direct to product lines | |||||||||||||||||||||||
| Marketing expenses | 2,000,000 | 2/3 Product A, 1/3 Product B | This analysis not shown here | |||||||||||||||||||||||
| General administrative expenses | 6,000,000 | 11,000,000 | ||||||||||||||||||||||||
| Operating loss | (2,000,000) | LOSS | ||||||||||||||||||||||||
| Expense [& Cost] | ||||||||||||||||||||||||||
| Direct materials | 15,000,000 | Traced through Cost System to products | ||||||||||||||||||||||||
| Direct labor | 12,000,000 | Traced through Cost System to products | ||||||||||||||||||||||||
| Manufacturing overhead | 14,000,000 | Traditional use manufacturing basis to product chose not to send with products | ||||||||||||||||||||||||
| Shipping expenses | 3,000,000 | Traced to Orders/customer directly through products | ||||||||||||||||||||||||
| Marketing expenses | 2,000,000 | |||||||||||||||||||||||||
| General administrative expenses | 6,000,000 | 52,000,000 | 30,000,000 | Cost Sys. | 22,000,000 | |||||||||||||||||||||
| total | Direct to Products | Through ABC Pools | ||||||||||||||||||||||||
| To be put into ABC pools to be allocated to Activities | 22,000,000 | ABC Pools | ||||||||||||||||||||||||
| Direct trace | 30,000,000 | |||||||||||||||||||||||||
| Overhead Costs at Baxter Battery | Natural Expense | |||||||||||||||||||||||||
| (Manufacturing and Nonmanufacturing) | & Function | |||||||||||||||||||||||||
| Production Department | ||||||||||||||||||||||||||
| Indirect factory wages | 6,000,000 | Data Given | ||||||||||||||||||||||||
| Factory equipment depreciation | 3,500,000 | |||||||||||||||||||||||||
| Factory utilities | 2,500,000 | |||||||||||||||||||||||||
| Factory building lease | 2,000,000 | 14,000,000 | ||||||||||||||||||||||||
| General Administrative Department | 9 expense categories to be allocated | |||||||||||||||||||||||||
| Administrative wages and salaries | 4,000,000 | |||||||||||||||||||||||||
| Office equipment depreciation | 900,000 | |||||||||||||||||||||||||
| Administrative building lease | 1,100,000 | 6,000,000 | ||||||||||||||||||||||||
| Marketing Department | ||||||||||||||||||||||||||
| Marketing wages and salaries | 1,500,000 | |||||||||||||||||||||||||
| Selling expenses | 500,000 | 2,000,000 | ||||||||||||||||||||||||
| Total overhead costs for allocation | 22,000,000 | |||||||||||||||||||||||||
| POOLS | [2] | Assign Overhead Costs to Activity Cost Pools | ||||||||||||||||||||||||
| Activity Cost Pools | Order Size* [Machine Hours] | Customer Relations [# OF CUSTOMERS] | Sustaining | |||||||||||||||||||||||
| [1] Define Pools →→→→ | Customer Orders | Design Changes | Other Not allocated | Total | ||||||||||||||||||||||
| Production Department | ||||||||||||||||||||||||||
| Indirect factory wages | 30% | 30% | 20% | 10% | 10% | 100% | ||||||||||||||||||||
| Factory equipment depreciation | 20% | 10% | 60% | 0% | 10% | 100% | ||||||||||||||||||||
| Factory utilities | 0% | 10% | 60% | 0% | 30% | 100% | ||||||||||||||||||||
| Factory building lease | 0% | 0% | 0% | 0% | 100% | 100% | ||||||||||||||||||||
| General Administrative Department | ||||||||||||||||||||||||||
| Administrative wages and salaries | 30% | 10% | 10% | 30% | 20% | 100% | ||||||||||||||||||||
| Office equipment depreciation | 30% | 10% | 0% | 20% | 40% | 100% | ||||||||||||||||||||
| Administrative building lease | 0% | 0% | 0% | 0% | 100% | 100% | ||||||||||||||||||||
| Marketing Department | Results of ABC study to determine allocation levels | |||||||||||||||||||||||||
| Marketing wages and salaries | 30% | 10% | 0% | 50% | 10% | 100% | ||||||||||||||||||||
| Selling expenses | 20% | 0% | 0% | 70% | 10% | 100% | ||||||||||||||||||||
| * ORDER SIZE = PROXY FOR MACHINE HOURS | ||||||||||||||||||||||||||
| Activity Cost Pools | Customer Relations [# OF CUSTOMERS] | Sustaining | ||||||||||||||||||||||||
| Multiply Amounts by % = | Customer Orders | Design changes | Order Size* | Other Not allocated | Total | Product of %s above X Total Amounts for department | ||||||||||||||||||||
| Production Department | 30% X $6000,000 | 6,000,000 | ||||||||||||||||||||||||
| Indirect factory wages | 1,800,000 | 1,800,000 | 1,200,000 | 600,000 | 600,000 | 6,000,000 | Manufacturing overhead | 3,500,000 | ||||||||||||||||||
| 20%X$3500K | Factory equipment depreciation | 700,000 | 350,000 | 2,100,000 | - 0 | 350,000 | 3,500,000 | 14,000,000 | 2,500,000 | |||||||||||||||||
| Factory utilities | - 0 | 250,000 | 1,500,000 | - 0 | 750,000 | 2,500,000 | 3,700,000 | unassigned ABC | 2,000,000 | |||||||||||||||||
| Factory building lease | - 0 | - 0 | - 0 | - 0 | 2,000,000 | 2,000,000 | 26.4% | 14,000,000 | All unassigned | |||||||||||||||||
| General Administrative Department | - 0 | - 0 | - 0 | - 0 | - 0 | 3,700,000 | ||||||||||||||||||||
| Administrative wages and salaries | 1,200,000 | 400,000 | 400,000 | 1,200,000 | 800,000 | 4,000,000 | General Administrative Department | 2,260,000 | ||||||||||||||||||
| Office equipment depreciation | 270,000 | 90,000 | - 0 | 180,000 | 360,000 | 900,000 | 6,000,000 | 37.7% | 200,000 | |||||||||||||||||
| Administrative building lease | - 0 | - 0 | - 0 | - 0 | 1,100,000 | 1,100,000 | 2,260,000 | unassigned ABC | 6,160,000 | |||||||||||||||||
| Marketing Department | unassigned ABC | |||||||||||||||||||||||||
| Marketing wages and salaries | 450,000 | 150,000 | - 0 | 750,000 | 150,000 | 1,500,000 | Marketing Department | 200,000 | ||||||||||||||||||
| Selling expenses | 100,000 | - 0 | - 0 | 350,000 | 50,000 | 500,000 | 2,000,000 | unassigned ABC | ||||||||||||||||||
| Total | 4,520,000 | 3,040,000 | 5,200,000 | 3,080,000 | 6,160,000 | 22,000,000 | ||||||||||||||||||||
| Money is in the pool | Given dataè | |||||||||||||||||||||||||
| Activity Level [3] | Customer | Sustaining | ||||||||||||||||||||||||
| Pool [1a] | Customer Orders | Design changes | Order Size | Customer Relations | Other Not allocated | Total | ||||||||||||||||||||
| Pool $s [1a] from above | 4,520,000 | 3,040,000 | 5,200,000 | 3,080,000 | 6,160,000 | 22,000,000 | ||||||||||||||||||||
| ACTIVITY Unit [1b] | Customer Orders | Design changes | Machine Hours | Number of Customers | Not allocated | |||||||||||||||||||||
| Allocated | 15,840,000 | |||||||||||||||||||||||||
| Rate: Activity Level [3] | ||||||||||||||||||||||||||
| ACTIVITY Unit [1b] | Customer Orders | Design changes | Machine Hours | Number of Customer | Not allocated | Given dataé | ||||||||||||||||||||
| Z = | ACTIVITY Units TO ALLOCATE [1b] | 10,000 | 4,000 | 800,000 | 2,000 | N/A | Hrs. | Units | Extd. Hrs. | ABC rate | $ 6.50 | |||||||||||||||
| $Amt. per Activity unit [3] | $ 452.00 | $ 760.00 | $ 6.50 | $ 1,540.00 | N/A | -B- | 0.8 | 400000 | 320000 | Machine Hrs | 448 | |||||||||||||||
| Denominator - Qty. of the pool activity = Z | Order size as Proxy | -A- | 0.6 | 800000 | 480000 | 800000 | Assigned $s | $ 2,912 | ||||||||||||||||||
| Summary | ||||||||||||||||||||||||||
| Allocation ABC | Direct or otherwise traced | |||||||||||||||||||||||||
| Direct materials | 15,000,000 | Traced as per data set above | ||||||||||||||||||||||||
| Direct labor | 12,000,000 | Traced as per data set above | ||||||||||||||||||||||||
| Manufacturing overhead | 14,000,000 | |||||||||||||||||||||||||
| Shipping expenses | 3,000,000 | Traced as per data set above | ||||||||||||||||||||||||
| Marketing expenses | 2,000,000 | |||||||||||||||||||||||||
| General administrative expenses | 6,000,000 | Total Expenses | ||||||||||||||||||||||||
| Total Traced via ABC | 22,000,000 | 30,000,000 | 52,000,000 | |||||||||||||||||||||||
| Not traced to ABC object | (6,160,000) | |||||||||||||||||||||||||
| To ABC Objects | 15,840,000 | 15,840,000 | 30.5% | in ABC pools | ||||||||||||||||||||||
| ------Product Lines------ | ||||||||||||||||||||||||||
| Pools | $ in Pool | Activity Measure | Qty of Act. Measure | Rate | Sure Starts [A] | Long Lifes [B] | Total | |||||||||||||||||||
| Customer Orders | 4,520,000 | Customer Orders | 10,000 | $ 452.00 | 4,000 | 6,000 | 10,000 | |||||||||||||||||||
| Design changes | 3,040,000 | Design changes | 4,000 | $ 760.00 | - 0 | 4,000 | 4,000 | |||||||||||||||||||
| Order Size | 5,200,000 | Machine Hours | 800,000 | $ 6.50 | 480,000 | 320,000 | 800,000 | |||||||||||||||||||
| Customer Relations | 3,080,000 | Number of Customers | 2,000 | $ 1,540.00 | Measured Actual | Measured Actual | From data set given | |||||||||||||||||||
| 15,840,000 | (6,160,000) | Not in ABC Pools | 22,000,000 | Sum ABC analysis | ||||||||||||||||||||||
| Excel B | ||||||||||||||||||||||||||
| [A] SureStart | (a) | (b) | (a) × (b) | |||||||||||||||||||||||
| Activity Cost Pools | Activity Rate | Activity | ABC Cost | |||||||||||||||||||||||
| Customer orders | $ 452.00 | 4,000 | $ 1,808,000 | |||||||||||||||||||||||
| Design changes | 760.00 | - 0 | - 0 | |||||||||||||||||||||||
| Order size [object is Product] | 6.50 | 480,000 | 3,120,000 | to Sure start | ||||||||||||||||||||||
| Total | Measured Actual | $ 4,928,000 | 31.1% | |||||||||||||||||||||||
| 5,200,000 | Order size | |||||||||||||||||||||||||
| [B] LongLife | (a) | (b) | (a) × (b) | |||||||||||||||||||||||
| Activity Cost Pools | Activity Rate | Activity | ABC Cost | $ 4,928,000 | ||||||||||||||||||||||
| Customer orders | $ 452.00 | 6,000 | $ 2,712,000 | $ 7,832,000 | A | B | ||||||||||||||||||||
| Design changes | 760.00 | 4,000 | 3,040,000 | $ 12,760,000 | 36 | 48 | Min | |||||||||||||||||||
| Order size {object is Product} | 6.50 | 320,000 | 2,080,000 | to Long Life | 15,840,000 | total to objects | 800000 | 400000 | Qty | |||||||||||||||||
| Total | Measured Actual | $ 7,832,000 | 49.4% | 3,080,000 | to objects not to products | $ 1,808,000 | Customer Orders | 28800000 | 19200000 | Min | ||||||||||||||||
| $ 12,760,000 | 80.6% | total ABC to Products | $ 2,712,000 | 4,520,000 | 480000 | 320000 | ||||||||||||||||||||
| Each | Assignable costs | $ 3,080,000 | to customers | $ 4,520,000 | 100% | Hrs | Hrs | |||||||||||||||||||
| $ 452.00 | Customer Orders | 4,520,000 | Product A | 4,928,000 | Order | |||||||||||||||||||||
| $ 760.00 | Design changes | 3,040,000 | Product B | 7,832,000 | # designs | 0.00 | Design changes | |||||||||||||||||||
| $ 6.50 | Order Size | 5,200,000 | NO | 3,040,000 | 3,040,000 | |||||||||||||||||||||
| SUM | 12,760,000 | 12,760,000 | Cust. Relations | 3,040,000 | 100% | |||||||||||||||||||||
| $3,080,000 | ||||||||||||||||||||||||||
| Cust. basis-Not assignable to Prod.A or B | 3,080,000 | Product A | 480,000 | Mach.Hrs. | to Products | $ 3,120,000 | Order Size | |||||||||||||||||||
| Product B | 320,000 | Mach.Hrs. | $ 2,080,000 | 5,200,000 | ||||||||||||||||||||||
| Rate = | $ 6.50 | $ 5,200,000 | 100% | |||||||||||||||||||||||
| ABC P&L | Sure Starts [A] | Long Lifes [B] | Total | From: | Excel C | |||||||||||||||||||||
| Sales | 31,300,000 | 18,700,000 | 50,000,000 | 31,300,000 | 18,700,000 | |||||||||||||||||||||
| Direct costs --- Direct to product | SureStart | LongLife | ||||||||||||||||||||||||
| Direct material | 9,000,000 | 6,000,000 | 15,000,000 | Cost system | data from cost system | Product line | A | B | Total | |||||||||||||||||
| Direct labor | 7,000,000 | 5,000,000 | 12,000,000 | Cost system | data from cost system | Quantity | 800,000 | 400,000 | 1,200,000 | A/seach | B/each | |||||||||||||||
| Shipping [ Direct to Prod.line] | 2,000,000 | 1,000,000 | 3,000,000 | Each product line has its own warehouse - shipping charges are freight & direct to product lines | Sales | $31,300,000 | $18,700,000 | $50,000,000 | $39 | $47 | ||||||||||||||||
| Subtotal | 18,000,000 | 12,000,000 | 30,000,000 | Given dataÚ | ||||||||||||||||||||||
| Contrib $s | 13,300,000 | 6,700,000 | 20,000,000 | Varable traced | DirectCosts through cost system | |||||||||||||||||||||
| Contrib % | 42% | 36% | 40% | with ABC costs | Material; | $9,000,000 | $6,000,000 | $15,000,000 | $11 | $15 | ||||||||||||||||
| Activity Pool Costs -Product Related: | ABC Assigned | DL | $7,000,000 | $5,000,000 | $12,000,000 | $9 | $13 | |||||||||||||||||||
| Order Size-Machine Hours | 3,120,000 | 2,080,000 | 5,200,000 | Shipping | $2,000,000 | $1,000,000 | $3,000,000 | $3 | $3 | |||||||||||||||||
| Customer Orders | 1,808,000 | 2,712,000 | 4,520,000 | ABC | Sum | $18,000,000 | $12,000,000 | $30,000,000 | $23 | $30 | ||||||||||||||||
| Design changes | - 0 | 3,040,000 | 3,040,000 | ABC | ||||||||||||||||||||||
| Subtotal | 4,928,000 | 7,832,000 | 12,760,000 | ABC | Contribution margin | $13,300,000 | $6,700,000 | $20,000,000 | $17 | $17 | ||||||||||||||||
| ABC Traceable/Assigned Expenses/Costs | 42.5% | 35.8% | 40.0% | 42.5% | 35.8% | |||||||||||||||||||||
| Product Margin %%% ******** | 27% | -6% | 14% | |||||||||||||||||||||||
| Product Margin $$$ ******** | 8,372,000 | (1,132,000) | 7,240,000 | ******** | ||||||||||||||||||||||
| ABC Unassigned to Product Lines | 6,160,000 | Unallocated | 6,160,000 | not in a ABC pool | ||||||||||||||||||||||
| *** | ABC # of Customers 'Customer common to both A & B | 3,080,000 | ABC/Product | çin a pool but not to products | ||||||||||||||||||||||
| Operating Income [Loss] | (2,000,000) | |||||||||||||||||||||||||
| + Customer Relations 3080000 Number of Customers | ||||||||||||||||||||||||||
| *** while can ABC to an activity can't get back to Product | ||||||||||||||||||||||||||
| GAAP/Traditional/FAC | Sure Starts [A] | Long Lifes [B] | Total | From: | Excel D | |||||||||||||||||||||
| Sales | 31,300,000 | 18,700,000 | 50,000,000 | |||||||||||||||||||||||
| Cost of Goods Sold [no ∆ in inventory] | No change in inventory | Productcost VS. Period costs | ||||||||||||||||||||||||
| Direct material | 9,000,000 | 6,000,000 | 15,000,000 | Cost system | Same as ABC | |||||||||||||||||||||
| Direct labor | 7,000,000 | 5,000,000 | 12,000,000 | Cost system | Same as ABC | |||||||||||||||||||||
| Manufacturing | 8,400,000 | 5,600,000 | 14,000,000 | Cost system | ||||||||||||||||||||||
| Total CoGS | 24,400,000 | 16,600,000 | 41,000,000 | Total manufacturing OH allocated via Mach.Hrs | ||||||||||||||||||||||
| 14,000,000 | Product A | 480000 | 60.0% | |||||||||||||||||||||||
| Gross Profit | 6,900,000 | 2,100,000 | 9,000,000 | 800,000 | Product B | 320000 | 40.0% | |||||||||||||||||||
| 22% | 11% | 18% | $ 17.50 | Sum | 800,000 | 100.0% | ||||||||||||||||||||
| Mach.Hrs. | $3,000,000 | Shipping expenses | ||||||||||||||||||||||||
| Selling and administrative expenses | 11,000,000 | all non-manufacturing expenses | $2,000,000 | Marketing expenses | ||||||||||||||||||||||
| $6,000,000 | General administrative expenses | |||||||||||||||||||||||||
| Operating Income [Loss] | (2,000,000) | $11,000,000 | ||||||||||||||||||||||||
| Variable/Contribution | Sure Starts [A] | Long Lifes [B] | Total | From: | Var. Mfg. OH | |||||||||||||||||||||
| Sales | 31,300,000 | 18,700,000 | 50,000,000 | Var.Mfg. OH | A | B | ||||||||||||||||||||
| No change in inventory | $ 17.50 | |||||||||||||||||||||||||
| Variable costs & expenses | 45% | |||||||||||||||||||||||||
| Direct material | 9,000,000 | 6,000,000 | 15,000,000 | Cost system | Same as GAAP/ABC | $ 7.88 | 480000 | 320000 | ||||||||||||||||||
| Direct labor | 7,000,000 | 5,000,000 | 12,000,000 | Cost system | Same as GAAP/ABC | 2/3 Product A, 1/3 Product B | $ 3,780,000 | $ 2,520,000 | $7,500 | + | ||||||||||||||||
| Shipping [ Direct to Prod.line] | 2,000,000 | 1,000,000 | 3,000,000 | 45% is a Given % | $6,700 | + | ||||||||||||||||||||
| Manufacturing: 45% variable | 3,780,000 | 2,520,000 | 6,300,000 | Cost system | Prod. Cost | From GAAP | 8,400,000 | 5,600,000 | $1,700 | + | ||||||||||||||||
| Variable Sell/Admin 8% of sales | 2,504,000 | 1,496,000 | 4,000,000 | 8% is a Given % Commission | Sum | 45% | 45% | $15,900 | = | |||||||||||||||||
| Total Variable Costs & expenses | 24,284,000 | 16,016,000 | 40,300,000 | 6,300,000 | 3,780,000 | 2,520,000 | ||||||||||||||||||||
| Contribution Margin | 7,016,000 | 2,684,000 | 9,700,000 | Shipping [ Direct to Prod.line] | 3,000,000 | V | ||||||||||||||||||||
| 22.4% | 14.4% | 19.4% | 22,000,000 | Total overhead costs for allocation | Variable Sell/Admin 8% of sales | 4,000,000 | V | |||||||||||||||||||
| Fixed | (6,300,000) | Manufacturing: 45% variable | General administrative expenses | 4,000,000 | F | |||||||||||||||||||||
| Manufacturing | 7,700,000 | (4,000,000) | Variable Sell/Admin 8% of sales | 11,000,000 | ||||||||||||||||||||||
| General administrative expenses | 4,000,000 | 11,700,000 | Fixed | |||||||||||||||||||||||
| V Mfg OH | Fxd. Mfg OH | Total Mfg OH | same as | |||||||||||||||||||||||
| Operating Income [Loss] | (2,000,000) | 6,300,000 | 7,700,000 | 14,000,000 | above | |||||||||||||||||||||
| Comparison | Sure Starts [A] | Long Lifes [B] | Total | |||||||||||||||||||||||
| Gross profit/Gross Margin/Contribution Margin | ||||||||||||||||||||||||||
| ABC P&L | 8,372,000 | (1,132,000) | 7,240,000 | |||||||||||||||||||||||
| GAAP/Traditional/FAC | 6,900,000 | 2,100,000 | 9,000,000 | |||||||||||||||||||||||
| Variable/Contribution | 7,016,000 | 2,684,000 | 9,700,000 | |||||||||||||||||||||||
| % of Sales | ||||||||||||||||||||||||||
| ABC P&L | 26.7% | -6.1% | 14.5% | Product Margin | ||||||||||||||||||||||
| GAAP/Traditional/FAC | 22.0% | 11.2% | 18.0% | Gross Profit | ||||||||||||||||||||||
| Variable/Contribution | 22.4% | 14.4% | 19.4% | Contrib.Margin | ||||||||||||||||||||||
| % of Total | ||||||||||||||||||||||||||
| ABC P&L | 115.6% | -15.6% | 100.0% | |||||||||||||||||||||||
| GAAP/Traditional/FAC | 76.7% | 23.3% | 100.0% | |||||||||||||||||||||||
| Variable/Contribution | 72.3% | 27.7% | 100.0% | |||||||||||||||||||||||
| back 42 |
HCT---&P of &N---&D,&T---&F,&A
Business Study to determine units
an objection to ABC is forcing a distribution
an objection to ABC is treating fixed as variable
Given data
Given data
Ch.8
| Doing calendar Q2 | |||||||||||||||||||
| Doing calendar Q2 | |||||||||||||||||||
| Doing calendar Q2 | |||||||||||||||||||
| Doing calendar Q2 | |||||||||||||||||||
| Doing calendar Q2 | |||||||||||||||||||
| Doing calendar Q2 | |||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||||||||
| Units Sales | 20,000 | 50,000 | 30,000 | 25,000 | 15,000 | 32,000 | 36,000 | 42,000 | 66,000 | ||||||||||
| Price each | $ 10.00 | $ 10.00 | $ 10.00 | $ 10.00 | $ 10.00 | $ 10.00 | |||||||||||||
| Budgeted Sales | 200,000 | 500,000 | 300,000 | 250,000 | 150,000 | 320,000 | |||||||||||||
| Period ending cash | CASH | 90,000 | 30% | uncollected | |||||||||||||||
| Collections | 75,000 | 25%/30% of end Q1 A/R will be collected | |||||||||||||||||
| 70% | of current priod | 175,000 | 105,000 | 224,000 | |||||||||||||||
| 25% | of prior period | 62,500 | 37,500 | ||||||||||||||||
| Sum | Cash collected | 250,000 | 167,500 | 261,500 | 679,000 | 679,000 | |||||||||||||
| Looking at Q2 | |||||||||||||||||||
| Ending inventory units | 20% | Mar | Apr | May | Jun | Jul | Aug | ||||||||||||
| Units Sales | 30,000 | 25,000 | 15,000 | 32,000 | 36,000 | 42,000 | |||||||||||||
| Budget Ending Inventory | 4,000 | 3,000 | 6,400 | 7,200 | 8,400 | [20% next mo. Sales] | |||||||||||||
| Sales + Ending | Given | 28,000 | 21,400 | 39,200 | 44,400 | ||||||||||||||
| Less Beginning = prior month-end | (4,000) | (3,000) | (6,400) | (7,200) | |||||||||||||||
| = Unit Production | 24,000 | 18,400 | 32,800 | 37,200 | |||||||||||||||
| Cost/Lb | Cost/Unit | ||||||||||||||||||
| Quantity per unit in Lbs. | 5.00 | $ 0.40 | $ 2.00 | Ending Inventory % next month | 10% | Looking at Q2 | |||||||||||||
| Mar | Apr | May | Jun | Jul | |||||||||||||||
| = Unit Production | - 0 | 24,000 | 18,400 | 32,800 | 37,200 | ||||||||||||||
| Required for Production/Lbs | - 0 | 120,000 | 92,000 | 164,000 | 186,000 | ||||||||||||||
| $s Into FG for Production | $ 48,000 | $ 36,800 | $ 65,600 | $ 150,400 | Qtr. Total | ||||||||||||||
| Budget Ending Inventory | 13,000 | 9,200 | 16,400 | 18,600 | 10% of following Month | ||||||||||||||
| Sales + Ending | 129,200 | 108,400 | 182,600 | ||||||||||||||||
| Less Beginning = prior month-end | (13,000) | (9,200) | (16,400) | ||||||||||||||||
| Qty. Purchase [additions] of Raw material | 116,200 | 99,200 | 166,200 | Material budget | |||||||||||||||
| $s. Purchase of Raw material | $ 46,480 | $ 39,680 | $ 66,480 | Material budget | $ 0.40 | per lb. | |||||||||||||
| Apr | Apr. | ||||||||||||||||||
| CASH | Ending A/P | $ 12,000 | $ 12,000 | Beg | $ 12,000 | ||||||||||||||
| Cr. To A/P = purchases | $ 46,480 | $ 39,680 | $ 66,480 | $ 46,480 | Add | $ 46,480 | |||||||||||||
| Pay 50% current [given company policy] | $ 23,240 | $ 19,840 | $ 33,240 | 1/2 April | $ (23,240) | Paid | $ (35,240) | ||||||||||||
| Pay prior | $ 12,000 | $ 23,240 | $ 19,840 | Cash budget | $ 35,240 | $ 23,240 | |||||||||||||
| Total paid | $ 35,240 | $ 43,080 | $ 53,080 | Cash budget | $ 131,400 | Paid | A/P | Ending | |||||||||||
| Ending A/P [Beginning + Additions - payments] | $ 23,240 | $ 19,840 | $ 33,240 | Qtr. Total | |||||||||||||||
| Guaranteed | Hours | Rate | |||||||||||||||||
| Payment for quarter | 1500 | $ 10.00 | |||||||||||||||||
| Required Hrs. per unit | 0.05 | 3 | minutes | ||||||||||||||||
| DL$s. per unit | $ 0.50 | 700 | |||||||||||||||||
| used for ending Q2 inventory | |||||||||||||||||||
| Apr | May | Jun | Qtr sum | ||||||||||||||||
| = Unit Production | 24,000 | 18,400 | 32,800 | 75,200 | |||||||||||||||
| HRs of Prodctn. at Required per unit of 0.05 hrs. ea. | 1,200 | 920 | 1,640 | 3,760 | |||||||||||||||
| DL Cost of production into units at 10 per Hr | $ 12,000 | $ 9,200 | $ 16,400 | 37,600 | |||||||||||||||
| unfavorable variance of | $ 8,800 | ||||||||||||||||||
| Hrs paid | 1,500 | 1,500 | 1,640 | 4,640 | 880 | Hours | |||||||||||||
| $s paid | $ 15,000 | $ 15,000 | $ 16,400 | 46,400 | |||||||||||||||
| ADDED | |||||||||||||||||||
| Productivity at budget earned HRs/paid HRs | 80% | 61% | 100% | Spend > Used by | $ 8,800 | into CoGS | |||||||||||||
| ******* | |||||||||||||||||||
| Variable OH $s per HR | $ 20.00 | Given: rate is per DL hr. | |||||||||||||||||
| Required Hrs. per unit | 0.05 | Hrs. per unit | 3 | minutes | |||||||||||||||
| Variable OH $s per unit | $ 1.00 | ||||||||||||||||||
| Fxd. MOH per month | $50,000 | ||||||||||||||||||
| Non cash MOH | $20,000 | ||||||||||||||||||
| Cash Mfg. OH | $30,000 | ||||||||||||||||||
| Actual Overhead rates NOT predetermined rates | |||||||||||||||||||
| Apr | May | Jun | Qtr. Sum | Required Hrs. per unit | 0.05 | ||||||||||||||
| = Unit Production | 24,000 | 18,400 | 32,800 | 75,200 | Fxd. OH spending | $50,000 | $50,000 | $50,000 | |||||||||||
| # Hrs. | 1,200 | 920 | 1,640 | ||||||||||||||||
| HRs of Prodctn. at Required per unit of 0.05 hrs. ea. | 1,200 | 920 | 1,640 | 3,760 | per Hr. | 41.67 | 54.35 | 30.49 | |||||||||||
| VOH Cost of production at $20 per DL Hr | $24,000 | $18,400 | $32,800 | per unit | 2.08 | 2.72 | 1.52 | ||||||||||||
| Fixed manufacturing OH per period | $50,000 | $50,000 | $50,000 | $ 150,000 | ADDED | ||||||||||||||
| Fxd. + Var. Mfg. OH | Total MOH per Month | $74,000 | $68,400 | $82,800 | $ 225,200 | $$$$ | QTY | $ 225,200 | |||||||||||
| Fxd. Mfg. OH rate/hr. | $ 41.67 | $ 54.35 | $ 30.49 | 39.89 | $ 150,000 | 3,760 | 3,760 | ||||||||||||
| Fxd. Mfg. OH unit | $ 2.08 | $ 2.72 | $ 1.52 | $ 1.99 | 0.05 | hrs. per unit | 59.89 | ||||||||||||
| Fxd. Mfg. OH rate/hr. | Quarter averageò | Apr | May | Jun | per Hr. | ||||||||||||||
| Budgeted MOH rate per period Fxd.+ Var. | 61.67 | 74.35 | 50.49 | 59.89 | Fxd + Var | $ 41.67 | $ 54.35 | $ 30.49 | Fxd rate | ||||||||||
| $ 20.00 | $ 20.00 | $ 20.00 | V. Rate | ||||||||||||||||
| 0 | Non-cash expense | ($20,000) | ($20,000) | ($20,000) | $ 61.67 | $ 74.35 | $ 50.49 | ||||||||||||
| Cash MOH | $ 54,000 | $ 48,400 | $ 62,800 | $ 165,200 | |||||||||||||||
| Qtr Total | |||||||||||||||||||
| Product Cost using Qtr. Average Fxd.unit | Variable | Fixed | |||||||||||||||||
| 0.40 | $5.00 | Materials | $ 2.00 | 5 lbs | $0.40/lb | ||||||||||||||
| 0.05 | $10.00 | DL | $ 0.50 | This example: Std. Hrs./unit | $ 10 | ||||||||||||||
| 0.05 | $20.00 | V Mfg. OH | $ 1.00 | 0.05 | |||||||||||||||
| 0.05 | $59.89 | F MFG. OH | 1.99 | This example: Actual rate for Qtr. | $ 0.50 | ||||||||||||||
| Sum | $ 3.50 | $ 1.99 | |||||||||||||||||
| $ 5.49 | average per unit for Qtr | ||||||||||||||||||
| Product cost without labor variance | |||||||||||||||||||
| CoGS chart | Qty | 4,000 | No WIP in Example | ||||||||||||||||
| given | $ 5.49 | $ 21,979 | Beginning Materials | ||||||||||||||||
| Excel C | Beginning FG | $ 22,000 | 4,000 | Excel B | Beginning FG | ||||||||||||||
| For Inome Statement | |||||||||||||||||||
| + Input addtions | |||||||||||||||||||
| Excel C | Materials | $ 150,400 | CoGS = | ||||||||||||||||
| Excel D | Labor | $ 46,400 | with variance | + Beginning | |||||||||||||||
| Excel E | Overhead | $ 225,200 | 75,200 | Excel B | + Additions | ||||||||||||||
| Total | $ 422,000 | - Ending | Ending Inventory Q2 | ||||||||||||||||
| Average per FG unit | 5.49 | Excel E | = CoGS | ||||||||||||||||
| $39,562 | $ 0.40 | per lb. | |||||||||||||||||
| - Ending | 7,200 | (39,562) | 7,200 | Excel B | End Qty. | 7,200 | FG | 18,600 | # lbs. | ||||||||||
| = CoGS | $ 404,438 | Each | 5.49 | End $s | RM | $ 7,440 | $47,002 | ||||||||||||
| $47,002 | total Inv. | ||||||||||||||||||
| Variable unit period cost | $ 0.50 | ||||||||||||||||||
| Fixed period costs | $ 70,000 | ||||||||||||||||||
| Non cash expenses | $ 10,000 | ||||||||||||||||||
| Cash Expense | $ 60,000 | ||||||||||||||||||
| Selling and Administrative | |||||||||||||||||||
| Period Costs | |||||||||||||||||||
| Apr | May | Jun | Qtr. Sum | ||||||||||||||||
| Units Sales | 25,000 | 15,000 | 32,000 | 72,000 | |||||||||||||||
| Variable Period costs/unit sold | $ 0.50 | $ 0.50 | $ 0.50 | ||||||||||||||||
| Variable unit period expenses | 12,500 | 7,500 | 16,000 | 36,000 | |||||||||||||||
| Fixed Period Expense | $ 70,000 | $ 70,000 | $ 70,000 | 210,000 | |||||||||||||||
| Total | 82,500 | 77,500 | 86,000 | 246,000 | to Income statement | ||||||||||||||
| Non cash portion | (10,000) | (10,000) | (10,000) | (30,000) | |||||||||||||||
| Cash Period Expense | 72,500 | 67,500 | 76,000 | 216,000 | CASH | ||||||||||||||
| Example uses the Direct Method of Receipts and Disbusrsement | |||||||||||||||||||
| for Cash Budgets; large companies use the Balance Ssheet Indirect method | |||||||||||||||||||
| We'll assume the debt exists for full quarter; borrowing may be drwn down as needed | |||||||||||||||||||
| and result is different result | |||||||||||||||||||
| Target Minimum Cash Balance | $10,000 | given | |||||||||||||||||
| Quarter June 30 | |||||||||||||||||||
| Beginning Cash Balance | $ 40,000 | Given | |||||||||||||||||
| + Collections | $ 679,000 | Excel A | |||||||||||||||||
| Cash avaialble | $ 719,000 | ||||||||||||||||||
| Cash disbursements: | |||||||||||||||||||
| Materials | $ 131,400 | Excel C | |||||||||||||||||
| Direct labor | $ 46,400 | Excel D | |||||||||||||||||
| Mfg. Overhead=Fxd. + Var - Non-cash | $ 165,200 | Excel E | required without interest | $ 35,000 | |||||||||||||||
| Selling/Admin. | $ 216,000 | Excel G | Borrowing | $ 19,000 | Average borrowing given | ||||||||||||||
| Equipment Purchased | $ 125,000 | Given data | # months | 3 | |||||||||||||||
| Interest | $ 285 | 6% | interest | $ 285 | 6% | ||||||||||||||
| Total | $ 684,285 | ||||||||||||||||||
| Management judged Cash balance adequate to operate did not pay down debt | |||||||||||||||||||
| Cash Balance | $ 34,715 | Could reduce Cash or change borrowing | |||||||||||||||||
| Debt on BS | $ - 0 | Excel K Below | Can balance BS with CASH or With Borrowing | ||||||||||||||||
| Royal Company | |||||||||||||||||||
| Statement of Income | |||||||||||||||||||
| QE: 6/30 | GAAP, FAC | ||||||||||||||||||
| Sales | 720,000 | 100.0% | Excel A | ||||||||||||||||
| Less: Cost of Goods Sold | $ 404,438 | 56.2% | Excel F | ||||||||||||||||
| Gross Margin | $ 315,562 | 43.8% | |||||||||||||||||
| Selling & Admin, Expense | 246,000 | 34.2% | Excel G | ||||||||||||||||
| Operating Income | 69,562 | 9.7% | |||||||||||||||||
| Interest Expense | $ 285 | 0.0% | |||||||||||||||||
| Income before taxes | $ 69,847 | 9.7% | |||||||||||||||||
| Beg Cash | $ 40,000 | ||||||||||||||||||
| Royal Company | Period Cash | $ 34,715 | |||||||||||||||||
| Month ending 6/30 | $ 74,715 | ||||||||||||||||||
| Balance Sheet | |||||||||||||||||||
| Assets | debt to Balance | ||||||||||||||||||
| Cash | $ 74,715 | Excel H | Keep Cash | 392,717 | Assets | ||||||||||||||
| sold | 320,000 | Accounts receivable | 96,000 | Excel A | $ (33,240) | ||||||||||||||
| 70% collected | (224,000) | Inventory | 47,002 | Excel F | $ (200,000) | ||||||||||||||
| 30% not collected | 96,000 | Land | 50,000 | Given | $ (156,422) | ||||||||||||||
| Equipment | 125,000 | Given | 3,055 | ||||||||||||||||
| Statement of Retained Earnings | Total assets | 392,717 | |||||||||||||||||
| Beginning | $ 86,575 | ||||||||||||||||||
| less: Dividends | 0 | Liabilities & Stockholders' Equity | |||||||||||||||||
| Plus: Income | $ 69,847 | Accounts Payable | $ 33,240 | Excel C | |||||||||||||||
| Ending Retained Earnings | $ 156,422 | Long term debt | $ 3,055 | Excel H | Keep Cash | Back into to Balance | |||||||||||||
| Common stock | $ 200,000 | Given | |||||||||||||||||
| Retained Earnings | $ 156,422 | ççright | |||||||||||||||||
| Total Liabilities & Stockholders' Equity | $ 392,717 | ||||||||||||||||||
| Minimize cash pay debt: balance with cash | Cash | $ 71,660 | Accounts Payable | $ 33,240 | debt to Balance | ||||||||||||||
| Accounts receivable | $ 96,000 | Common stock | $ 200,000 | $ 389,662 | assets | ||||||||||||||
| Inventory | $ 47,002 | Retained Earnings | $ 156,422 | $ (33,240) | |||||||||||||||
| Land | $ 50,000 | $ 389,662 | $ (200,000) | ||||||||||||||||
| Equipment | $ 125,000 | Debt to balance | $ - 0 | $ (156,422) | pay down debt to -0- | ||||||||||||||
| $ 389,662 | $ 389,662 | $ - 0 | |||||||||||||||||
ACC220===HCT---&P of &N---&D, &T---&F, &A
Excel A Sales Budget
Excel D Direct Labor
Excel E Manufacturing Overhead
Excel F CoGS
Excel G S&A Expense
Excel B FG budget
Excel H Cash
Excel I Statement of Income
Excel J // Balance Sheet
2
1
5
3
6
7
4
8
9
10
Excel C Materials
invested capital
Ch.9 Flex A
| STATIC Budget | 1 | ||||||||||||||||
| For the Period Ended June 30 | |||||||||||||||||
| Planning | òSell Price Each | ||||||||||||||||
| Budget | $ 75.00 | Reminder Y = a + bX | |||||||||||||||
| Wages and salaries | |||||||||||||||||
| Number of units (Q) | 500 | Characteristics | bX | ||||||||||||||
| Fixed | Variable each | Basis | |||||||||||||||
| Revenue | $ 37,500 | $ - 0 | $ 75 | units sold | Y = | a | + b | X | |||||||||
| Expenses: | ê | ê | ê | ê | |||||||||||||
| Wages and salaries | $ 20,000 | $ 5,000 | $ 30 | units sold | $ 20,000 | $ 5,000 | 500 | $30 | |||||||||
| By | Gasoline and supplies | 4,500 | $ - 0 | $ 9 | units sold | $ 4,500 | $ - 0 | 500 | $9 | ||||||||
| Natural | Equipment maintenance | 1,500 | $ - 0 | $ 3 | units sold | $ 1,500 | $ - 0 | 500 | $3 | ||||||||
| Expense | Office and shop utilities | 1,000 | $ 1,000 | $ - 0 | |||||||||||||
| in | Office and shop rent | 2,000 | $ 2,000 | $ - 0 | |||||||||||||
| this | Equipment Depreciation | 2,500 | $ 2,500 | $ - 0 | |||||||||||||
| Example | Insurance | 1,000 | $ 1,000 | $ - 0 | |||||||||||||
| Total expenses | 32,500 | ||||||||||||||||
| Net operating income | $ 5,000 | ||||||||||||||||
| ACTUAL | 1 | ||||||||||||||||
| For the Period Ended June 30 | |||||||||||||||||
| Actual | |||||||||||||||||
| Results | |||||||||||||||||
| Number of units | Driver | 550 | Actual | Not | |||||||||||||
| $78.18 | $75.00 | ||||||||||||||||
| Revenue | $ 43,000 | SP Each | |||||||||||||||
| Expenses: | |||||||||||||||||
| Wages and salaries | $ 23,500 | given from Financials | |||||||||||||||
| Gasoline and supplies | 5,100 | given from Financials | |||||||||||||||
| Equipment maintenance | 1,300 | given from Financials | |||||||||||||||
| Office and shop utilities | 950 | given from Financials | |||||||||||||||
| Office and shop rent | 2,000 | given from Financials | |||||||||||||||
| Equipment Depreciation | 2,500 | given from Financials | |||||||||||||||
| Insurance | 1,200 | given from Financials | |||||||||||||||
| Total expenses | 36,550 | ||||||||||||||||
| Net operating income | $ 6,450 | ||||||||||||||||
| Variance from Budget | 1 | ||||||||||||||||
| Favorable | Sales [units or price each], Revenue Increased | ||||||||||||||||
| Expenses Costs decrease | |||||||||||||||||
| Unfavorable: Sales decrease | |||||||||||||||||
| Expenses/costs increase | |||||||||||||||||
| Actual V. Static | 1 | ||||||||||||||||
| Total | |||||||||||||||||
| For the Period Ended June 30 | Differences | ||||||||||||||||
| Planning | Actual | ||||||||||||||||
| Budget | Results | Variances | |||||||||||||||
| F=favorable | |||||||||||||||||
| U= Unfav | |||||||||||||||||
| Number of units (Q) | 500 | 550 | 50 | F | |||||||||||||
| Revenue | $ 37,500 | $ 43,000 | $ 5,500 | F | |||||||||||||
| Expenses: | |||||||||||||||||
| Wages and salaries | $ 20,000 | $ 23,500 | $ 3,500 | U | |||||||||||||
| Gasoline and supplies | 4,500 | 5,100 | 600 | U | |||||||||||||
| Equipment maintenance | 1,500 | 1,300 | 200 | F | |||||||||||||
| Office and shop utilities | 1,000 | 950 | 50 | F | |||||||||||||
| Office and shop rent | 2,000 | 2,000 | - 0 | ||||||||||||||
| Equipment Depreciation | 2,500 | 2,500 | - 0 | ||||||||||||||
| Insurance | 1,000 | 1,200 | 200 | U | |||||||||||||
| Total expenses | 32,500 | 36,550 | 4,050 | U | |||||||||||||
| Net operating income | $ 5,000 | $ 6,450 | $ 1,450 | F | |||||||||||||
| DO ALL "Unfavorable" indicate poor performance | |||||||||||||||||
| NO | 1 | ||||||||||||||||
| PPT | |||||||||||||||||
| STATIC v. FLEX Budget | |||||||||||||||||
| For the Period Ended June 30 | 2 | ||||||||||||||||
| Single Driver = Units Sold | STATIC | FLEX'd | |||||||||||||||
| STATIC | Planning | Flexible | |||||||||||||||
| Planning | Budget | Budget | |||||||||||||||
| sell each | |||||||||||||||||
| Number of units (Q) | $ 75 | 500 | 550 | Budget Characteristics | |||||||||||||
| Fixed | Variable Each | Basis | Actual | Budget | Flex'd | ||||||||||||
| Revenue | $ 37,500 | $ 41,250 | $0 | $75 | units sold | 550 | X | $75 | = | 41,250 | |||||||
| Expenses: | |||||||||||||||||
| Wages and salaries | $ 20,000 | $ 21,500 | $5,000 | $30 | units sold | ||||||||||||
| Gasoline and supplies | 4,500 | 4,950 | $0 | $9 | units sold | 550 | X | $9 | = | 4,950 | Var. only | ||||||
| Equipment maintenance | 1,500 | 1,650 | $0 | $3 | units sold | 550 | X | $3 | = | 1,650 | |||||||
| No variable | Office and shop utilities | 1,000 | 1,000 | $1,000 | $0 | Y = | a | + b | X | ||||||||
| No variable | Office and shop rent | 2,000 | 2,000 | $2,000 | $0 | $ 20,000 | $ 5,000 | 500 | $30 | Fxd. | |||||||
| No variable | Equipment Depreciation | 2,500 | 2,500 | $2,500 | $0 | Flex'd | 550 | & | |||||||||
| No variable | Insurance | 1,000 | 1,000 | $1,000 | $0 | $ 21,500 | $ 5,000 | $ 16,500 | flexed | Variable | |||||||
| Total expenses | 32,500 | 34,600 | y | a | bX | ||||||||||||
| Net operating income | $ 5,000 | $ 6,650 | $ 1,650 | ←←Δ due to Volume = | |||||||||||||
| STATIC v. FLEX Budget | |||||||||||||||||
| For the Period Ended June 30 | 3 | ||||||||||||||||
| Single Driver = Units Sold | Fav/(Unfav) | ||||||||||||||||
| Planning | Flexible | Activity | |||||||||||||||
| Budget | Budget | or Volume | |||||||||||||||
| Variance | |||||||||||||||||
| Number of units (Q) | 500 | 550 | 50 | Fav | |||||||||||||
| Revenue | $ 37,500 | $ 41,250 | $ 3,750 | Fav | Driver | 550 | 100% var. | ||||||||||
| Expenses: | Variable each | Qty. | bX | a | |||||||||||||
| Wages and salaries | $ 20,000 | $ 21,500 | $ (1,500) | Unfav | $30 | 550 | 16,500 | $ 5,000 | Mxd. Fxd. & Var. | ||||||||
| Gasoline and supplies | 4,500 | 4,950 | $ (450) | Unfav | $9 | 550 | 4,950 | $ - 0 | 100% | ||||||||
| Equipment maintenance | 1,500 | 1,650 | $ (150) | Unfav | $3 | 550 | 1,650 | $ - 0 | Var. | ||||||||
| Office and shop utilities | 1,000 | 1,000 | $ - 0 | -- | 100% Fxd. | ||||||||||||
| Office and shop rent | 2,000 | 2,000 | $ - 0 | -- | 100% Fxd. | ||||||||||||
| Equipment Depreciation | 2,500 | 2,500 | $ - 0 | -- | 100% Fxd. | ||||||||||||
| Insurance | 1,000 | 1,000 | $ - 0 | -- | 100% Fxd. | ||||||||||||
| Total expenses | 32,500 | 34,600 | (2,100) | Unfav | |||||||||||||
| Net operating income | $ 5,000 | $ 6,650 | $ 1,650 | Fav | |||||||||||||
| Single Driver = Units Sold | Due to | ||||||||||||||||
| STATIC v. FLEX Budget | 3 | Volume | |||||||||||||||
| For the Period Ended June 30 | F/(Unfav) | ||||||||||||||||
| % change | |||||||||||||||||
| Planning | Flexible | Activity | Change should be based on units | ||||||||||||||
| Budget | Budget | or Volume | F/(Unfav) | ||||||||||||||
| Variance | % change | ||||||||||||||||
| Number of units (Q) | 500 | 550 | 10.0% | F | |||||||||||||
| Revenue | $ 37,500 | $ 41,250 | $ 3,750 | 10.0% | F | 100% Variable | |||||||||||
| Expenses: | Reminder Y = a + bX | Fixed | Variable Each | ||||||||||||||
| Wages and salaries | $ 20,000 | $ 21,500 | $ (1,500) | -7.5% | U | Fxd. & Variable | $ 5,000 | $ 30 | |||||||||
| Gasoline and supplies | 4,500 | 4,950 | $ (450) | -10.0% | U | 100% variable | $ - 0 | $ 9 | |||||||||
| Equipment maintenance | 1,500 | 1,650 | $ (150) | -10.0% | U | 100% variable | $ - 0 | $ 3 | |||||||||
| Office and shop utilities | 1,000 | 1,000 | $ - 0 | 0.0% | |||||||||||||
| Office and shop rent | 2,000 | 2,000 | $ - 0 | 0.0% | |||||||||||||
| Equipment Depreciation | 2,500 | 2,500 | $ - 0 | 0.0% | |||||||||||||
| Insurance | 1,000 | 1,000 | $ - 0 | 0.0% | |||||||||||||
| Total expenses | 32,500 | 34,600 | (2,100) | -6.5% | U | ||||||||||||
| Net operating income | $ 5,000 | $ 6,650 | $ 1,650 | 33.0% | F | ||||||||||||
| Due to Volume | Revenue | 10.0% | Up = Fav | 3 | |||||||||||||
| Net operating income | 33.0% | Up = Fav | |||||||||||||||
| PPT | 4 | Single Driver = Units Sold | Actual minus Flex'd | ||||||||||||||
| Revenue Variance | Added Excel 4 | Management focus for spending | |||||||||||||||
| STATIC v. FLEX Budget | Non-Con. Volume | Controllable | |||||||||||||||
| For the Period Ended June 30 | Static | F/(Unfav) | Prior Step | F/(Unfav) | Budget | ||||||||||||
| 4 | Planning | Activity | Flexible | Spending | Data Given | to Actual | 550 | ||||||||||
| Budget | or Volume | Budget | Revenue | Actual | Variance | All | Controllable | 3.18 | |||||||||
| Variance | Variance | 1,749 | |||||||||||||||
| Number of units (Q) | 500 | 550 | Controllable | 550 | |||||||||||||
| Revenue | $ 37,500 | $ 3,750 | $ 41,250 | $ 1,750 | $ 43,000 | $ 5,500 | F | F | |||||||||
| Expenses: | 0 | ||||||||||||||||
| Wages and salaries | $ 20,000 | $ (1,500) | $ 21,500 | $ (2,000) | $ 23,500 | (3,500) | U | U | |||||||||
| Gasoline and supplies | 4,500 | $ (450) | 4,950 | $ (150) | 5,100 | (600) | U | U | |||||||||
| Equipment maintenance | 1,500 | $ (150) | 1,650 | $ 350 | 1,300 | 200 | F | F | |||||||||
| Office and shop utilities | 1,000 | $ - 0 | 1,000 | $ 50 | 950 | 50 | F | F | |||||||||
| Office and shop rent | 2,000 | $ - 0 | 2,000 | $ - 0 | 2,000 | 0 | |||||||||||
| Equipment Depreciation | 2,500 | $ - 0 | 2,500 | $ - 0 | 2,500 | 0 | |||||||||||
| Insurance | 1,000 | $ - 0 | 1,000 | $ (200) | 1,200 | (200) | U | U | |||||||||
| Total expenses | 32,500 | (2,100) | 34,600 | (1,950) | 36,550 | (4,050) | U | U | |||||||||
| Net operating income | $ 5,000 | $ 1,650 | $ 6,650 | $ (200) | $ 6,450 | 1,450 | F | U | |||||||||
| Revenue | $s | Variable | Summary | Variable | Price // | 550 | Fav. | ||||||||||
| Static | 37,500 | Units | $s Each | each | Volume | Spending | 500 | 50 | |||||||||
| Volume [or Activity] | 3,750 | 50 | 75 | Revenue | $ 75 | $ 3,750 | $ 1,750 | ||||||||||
| Price/other | 1,750 | Expenses | $ 42 | (2,100) | (1,950) | ||||||||||||
| Actual | 43,000 | Income | $ 33 | 1,650 | (200) | ||||||||||||
| 1,450 | |||||||||||||||||
| Wages and salaries | $s | Variable | |||||||||||||||
| Static | 20,000 | Units | $s Each | Fixed | |||||||||||||
| Activity | (1,500) | 50 | 30 | $ 5,000 | |||||||||||||
| Price/other | (2,000) | ||||||||||||||||
| Actual | 23,500 | 4 | |||||||||||||||
| PPT | |||||||||||||||||
| ClassCo Manufacturing | |||||||||||||||||
| STATIC Budget | Y=a+bX | Static | 5A1 | ||||||||||||||
| Multiple Drivers | Budget | ||||||||||||||||
| Sales Qty. | 3,000 | Hours | 12,000 | Driver | 4.00 | Hrs.Each | |||||||||||
| Sell each | $ 340 | Units | 3,000 | Driver | |||||||||||||
| Sales | Units sold | 1,020,000 | STATIC Budget | ||||||||||||||
| TWO | Variable | 67% | 33% | ||||||||||||||
| Expense | Driver | Each | Fixed | Fixed | Variable | % Fxd. | |||||||||||
| 100% V | Direct labor | DL Hours | $ 14.00 | 0 | 168,000 | 0 | 168,000 | 0% | 12,000 | $ 14.00 | $ 168,000 | ||||||
| 100% V | Material & Supplies | Units | $ 22.00 | 0 | 66,000 | 0 | 66,000 | 0% | 3,000 | $ 22.00 | $ 66,000 | ||||||
| Y=a+bX | Line Supervision | Units | $ 3.00 | 110,000 | 119,000 | = $110,000 + $3 X 3000 units | 110,000 | 9,000 | 92% | Y=a+bX | |||||||
| 100% F | Deprecation | N/A | $ - 0 | 250,000 | 250,000 | 250,000 | 0 | 100% | |||||||||
| Y=a+bX | Rework & repair | DL Hours | $ 2.50 | 20,000 | 50,000 | = $20,000 + $2.5 X 12000 hrs. | 20,000 | 30,000 | 40% | 12,000 | $ 2.50 | 20,000 | |||||
| Y=a+bX | Testing | Units | $ 4.00 | 80,000 | 92,000 | = $80,000 + $4 X 3000 units | 80,000 | 12,000 | 87% | ||||||||
| Y=a+bX | Admin. | N/A | $ - 0 | 120,000 | 120,000 | 120,000 | 0 | 100% | |||||||||
| 580,000 | 285,000 | 67% | 3,000 | ||||||||||||||
| Total | 580,000 | 865,000 | Sum F/V | 865,000 | 340 | ||||||||||||
| Operating Income | 155,000 | Sales | 1,020,000 | ||||||||||||||
| ClassCo Manufacturing | Multiple Drivers | Line supervision | Materials & supplies | Direct Labor | |||||||||||||
| FLEX Budget | 5C3 | Driver Units | 3,300 | Driver Units. | 3,300 | Driver Hrs. | 14,000 | ||||||||||
| Actual | Actual | From Actual Below | per unit | $ 3.00 | per unit | $ 22.00 | per unit | $ 14.00 | |||||||||
| Actual Hrs. | 14,000 | 9,900 | 72,600 | 196,000 | |||||||||||||
| Actual UnitsSold | 3,345 | Act. Units made | 3,300 | MADE=Production | Fxd. | 110,000 | Fxd. | 0 | Fxd. | 0 | |||||||
| Flex'd | 119,900 | Flex'd | 72,600 | Flex'd | 196,000 | ||||||||||||
| Sales $ | 1,137,300 | ||||||||||||||||
| TWO | Variable | 64% | 36% | Rework & Repair | |||||||||||||
| Expense | Driver | Each | Fixed | Fixed | Variable | Variable | Driver Hrs. | 14,000 | |||||||||
| Direct labor | DL Hours | $ 14.00 | 0 | 196,000 | Flexible budget | 0 | 196,000 | 14,000 | $ 14.00 | per unit | $ 2.50 | ||||||
| Material & Supplies | Units | $ 22.00 | 0 | 72,600 | Flexible budget | 0 | 72,600 | 14,000 | $ 22.00 | 35,000 | |||||||
| Line Supervision | Units | $ 3.00 | 110,000 | 119,900 | Flexible budget | 110,000 | 9,900 | 3,300 | $ 3.00 | Fxd. | 20,000 | ||||||
| Deprecation | N/A | $ - 0 | 250,000 | 250,000 | Flexible budget | 250,000 | 0 | N/A | N/A | Flex'd | 55,000 | ||||||
| Rework & repair | DL Hours | $ 2.50 | 20,000 | 55,000 | Flexible budget | 20,000 | 35,000 | 14,000 | $ 2.50 | ||||||||
| Testing | Units | $ 4.00 | 80,000 | 93,200 | Flexible budget | 80,000 | 13,200 | 3,300 | 4 | Testing | |||||||
| Admin. | N/A | $ - 0 | 120,000 | 120,000 | Flexible budget | 120,000 | 0 | N/A | N/A | Driver units | 3,300 | ||||||
| Total: | 580,000 | 906,700 | 580,000 | 326,700 | per unit | $ 4.00 | |||||||||||
| Sum F/V | 906,700 | 13,200 | |||||||||||||||
| Operating Income | 230,600 | Fxd. | 80,000 | ||||||||||||||
| Flex'd | 93,200 | ||||||||||||||||
| ClassCo Manufacturing | Sales | ||||||||||||||||
| Actual | Actual | 5C2 | Sold Qty. @ Budget SP each | ||||||||||||||
| Units | 3345 | Actual Hrs. | 14,000 | 1,137,300 | |||||||||||||
| Act. Units made | 3,300 | made | Act. Q. | 3,345 | |||||||||||||
| Bud.SP ea. | $ 340.00 | Volume | |||||||||||||||
| Sales | 1,145,300 | Budget | 1,020,000 | 117,300 | |||||||||||||
| Expense | Actual sales | 1,145,300 | 8,000 | ||||||||||||||
| Direct labor | 204,000 | Spending/Performance | |||||||||||||||
| Material & Supplies | 69,000 | ||||||||||||||||
| Line Supervision | 131,000 | ||||||||||||||||
| Deprecation | 248,500 | ||||||||||||||||
| Rework & repair | 47,000 | ||||||||||||||||
| Testing | 95,000 | ||||||||||||||||
| Admin. | 128,000 | ||||||||||||||||
| Total | 922,500 | S | |||||||||||||||
| Operating Income | 222,800 | ||||||||||||||||
| Column #1 | Column #2 | Column #3 | Column #4 | Column #5 | |||||||||||||
| STATIC v. FLEX Budget | Non-Con. Volume | 5D4 | Controllable Performance | ||||||||||||||
| For the Period Ended June 30 | F/(Unfav) | from above | F/(Unfav) | Budget | |||||||||||||
| Multiple Drivers | Planning | Activity | Flexible | Spending | to Actual | ||||||||||||
| Budget | or Volume | Budget | Actual | Variance | |||||||||||||
| Variance | Variance | ||||||||||||||||
| DL Hrs | 12,000 | 14,000 | 14,000 | ||||||||||||||
| Units | 3,000 | 3,300 | 3,300 | ||||||||||||||
| Sales | 1,020,000 | 117,300 | 1,137,300 | 8,000 | 1,145,300 | 125,300 | 0 | ||||||||||
| Expense | |||||||||||||||||
| DL Hours | Direct labor | 168,000 | (28,000) | 196,000 | (8,000) | 204,000 | (36,000) | 0 | |||||||||
| Units | Material & Supplies | 66,000 | (6,600) | 72,600 | 3,600 | 69,000 | (3,000) | 0 | ` | ||||||||
| Units | Line Supervision | 119,000 | (900) | 119,900 | (11,100) | 131,000 | (12,000) | 0 | |||||||||
| N/A | Deprecation | 250,000 | 0 | 250,000 | 1,500 | 248,500 | 1,500 | 0 | |||||||||
| DL Hours | Rework & repair | 50,000 | (5,000) | 55,000 | 8,000 | 47,000 | 3,000 | 0 | |||||||||
| Units | Testing | 92,000 | (1,200) | 93,200 | (1,800) | 95,000 | (3,000) | 0 | |||||||||
| N/A | Admin. | 120,000 | 0 | 120,000 | (8,000) | 128,000 | (8,000) | 0 | |||||||||
| Total | 865,000 | (41,700) | 906,700 | (15,800) | 922,500 | (57,500) | 0 | ||||||||||
| Operating Income | 155,000 | 75,600 | 230,600 | (7,800) | 222,800 | 67,800 | 0 | ||||||||||
| PPT | |||||||||||||||||
HCT---&P of &N---&D,&T---&F,&14&A
Quantity of units sold is the driver is this example
More Revenue is Favorable Less Revenue is Unfavorable More Expense/Cost is Unfavorable Less Expense/Cost is Favorable
A
B
B-A
D
A-D
1
2
3
4
5
A
A
B
B
C
C
D
D
E
E
Y
Y
FROM ACTUAL BELOW X
X
ACTUAL
1
Ch.9 Flex B
| Rider University | Chapter 9 | Chapter 9 -- Example -- HCT | ACC302 Cost Management | Computational Template | |||||||||||||||||||||||||||||
| ACC220 | Flexible Budgets & Direct Cost Variances | ||||||||||||||||||||||||||||||||
| Actual | Standard | Normal | |||||||||||||||||||||||||||||||
| Computational Template | |||||||||||||||||||||||||||||||||
| Actual | Standard | Normal | |||||||||||||||||||||||||||||||
| Materials | Purchase price | Actual x | Standard x | Actual x | |||||||||||||||||||||||||||||
| Usage per Unit | Actual x | Standard x | Actual x | ||||||||||||||||||||||||||||||
| Units made | Actual | Actual | Actual | ||||||||||||||||||||||||||||||
| Variance on P&L | No | Yes | No | ||||||||||||||||||||||||||||||
| Labor | Rate per DL .Hr. | Actual | Standard x | Actual | |||||||||||||||||||||||||||||
| Hrs, per Unit | Actual | Standard x | Actual | ||||||||||||||||||||||||||||||
| Units | Actual | Actual | Actual | ||||||||||||||||||||||||||||||
| Variance on P&L | No | Yes | No | ||||||||||||||||||||||||||||||
| Overhead * | Rate per Hr. | Actual | Standard x | Normal x | |||||||||||||||||||||||||||||
| Hrs. per Unit | Actual | Standard x | Actual x | ||||||||||||||||||||||||||||||
| Units | Actual | Actual | Actual | ||||||||||||||||||||||||||||||
| Variance on P&L | No | Yes | Yes | ||||||||||||||||||||||||||||||
| Usage per Unit | Actual x | ERROR:#REF! | Actual x | ||||||||||||||||||||||||||||||
| Level 0 | Operating Income | FAC | Variable | FAC | Variable | Normal = Plan | Units made | Actual | Actual | Actual | |||||||||||||||||||||||
| Level 1 | Act-Static Budget by P&L line | Actual | Actual | Std. | Std | FAC | Variable | Theoretical | Variance on P&L | No | Yes | No | |||||||||||||||||||||
| Level 2 | Act-Flex-Static Budget by P&L line | Business Plan Production Units | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 3,998,000 | Labor | Rate per DL .Hr. | Actual | Standard x | Actual | |||||||||||||||||||||
| Level 3 | Act-Flex-Static Budget by Level below P&L line such as direct costs | Actual Production units | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | Hrs, per Unit | Actual | Standard x | Actual | |||||||||||||||||||||
| Planned Sales Units for STD./Normal & Actual units for Actual | 1,875,000 | 1,875,000 | 1,950,000 | 1,950,000 | 1,950,000 | 1,950,000 | - 0 | Units | Actual | Actual | Actual | ||||||||||||||||||||||
| Level 4 | Act-Flex-Static Budget at lower level such as function | Planned Sales Price/unit | $ 525 | $ 525.00 | $ 531.00 | $ 531.00 | $ 531.00 | $ 531.00 | Variance on P&L | No | Yes | No | |||||||||||||||||||||
| Planned Ending Inventory | 50,000 | 50,000 | 50,000 | 50,000 | Overhead * | Rate per Hr. | Actual | Standard x | Normal x | ||||||||||||||||||||||||
| Actual ending Inventory | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | Hrs. per Unit | Actual | Standard x | Actual x | |||||||||||||||||||||||
| Static budget Variance: | Actual - static budget | Actual Sales Price | 1,875,000 | 1,875,000 | Units | Actual | Actual | Actual | |||||||||||||||||||||||||
| Flexible Budgeted | Actual Unit Sales | $ 525.00 | $ 525.00 | Variance on P&L | No | Yes | Yes | ||||||||||||||||||||||||||
| Sales | Actual units x Budgeted ASP | Direct Material unit price | $ 7.00 | $ 7.00 | $ 7.25 | $ 7.25 | $ 7.25 | $ 7.25 | |||||||||||||||||||||||||
| CM$ | Flexible Sales x Budget CM% | DM qty./unit | 10.50 | $ 10.50 | 10.75 | $ 10.75 | $ 10.50 | $ 10.50 | |||||||||||||||||||||||||
| Direct Costs | Actual Units x Budgeted direct costs/unit @ budget prices | DM $ /unit | $ 73.50 | $ 73.50 | $ 77.94 | $ 77.94 | $ 73.50 | $ 73.50 | |||||||||||||||||||||||||
| Direct Costs | Flex Sales - Flex CM$s | DL Hrs per unit for denominator | 6.40 | 6.40 | 6.70 | 6.70 | 6.70 | 6.70 | 4.95 | 172.7 | |||||||||||||||||||||||
| Variable Overhead | Actual Units x Budgeted VOH/unit | DL Hr. Unit for Absorption/COGS | 6.40 | 6.40 | 6.70 | 6.70 | 6.40 | 6.40 | |||||||||||||||||||||||||
| $/DL Hr. | $ 15.50 | $ 15.50 | $ 15.75 | $ 15.75 | 15.50 | $ 15.50 | |||||||||||||||||||||||||||
| Level 0 variance | 0 | Actual Operating Income - Budget OI | DL$ Unit | $ 99.20 | $ 99.20 | $ 105.53 | $ 105.53 | 99.20 | $ 99.20 | ||||||||||||||||||||||||
| Static Budget var.by P&L | 1 | Actual P&L line - budget P&L Line | Planned Variable OH spending | $ 177,500,000 | $ 177,500,000 | $ 177,500,000 | $ 177,500,000 | ||||||||||||||||||||||||||
| Flexible Budget Variance | 2 | Actual - Flex budget | Actual Variable OH spending | $ 166,000,000 | $ 166,000,000 | ||||||||||||||||||||||||||||
| Flex Budget CM$ Variance | 2 | (Actual Sales - Flex Sales) x Actual CM$/unit | Planned Fixed OH spending | $ 184,500,000 | $ 184,500,000 | $ 184,500,000 | $ 184,500,000 | ||||||||||||||||||||||||||
| Flex Input Costs | 2 | Actual input Qty x Budget input unit price | Actual Fixed OH spending | $ 173,000,000 | $ 173,000,000 | ||||||||||||||||||||||||||||
| Sale volume variance for OI | 2 | Flex - static budget | Basis for OH Rates | DL Hours | DL Hours | DL Hours | DL Hours | DL Hours | DL Hours | ||||||||||||||||||||||||
| Flexible Budget Variance + Sale volume variance = Static Bud. Var. | Denominator for OH Rate | 12,640,000 | 12,640,000 | 13,400,000 | 13,400,000 | 13,400,000 | 13,400,000 | ||||||||||||||||||||||||||
| Sale Mix Var. | 2 | (Act.Units x Actual ASP x Bus. CM$ /unit) - Flex CM$ | Basis for Absorption | 12,640,000 | 12,640,000 | 12,640,000 | 12,640,000 | 12,640,000 | 12,640,000 | ||||||||||||||||||||||||
| Sales Volume (or QTY.) Var for OI | 2 | Budget CM$/unit x ( Actual units - Budget units) | |||||||||||||||||||||||||||||||
| Sale volume variance for OI | 2 | Sale Mix Var. | .+ | Sales Volume (or QTY.) Var for OI | |||||||||||||||||||||||||||||
| Input Price Variance | 3 | (Actual Cost input x actual price) - (Actual cost input x budget price) | VOH Rate/Hour | $ 13.13 | $ 13.13 | $ 13.25 | $ 13.25 | $ 13.25 | $ 13.25 | ||||||||||||||||||||||||
| Input Efficiency-Usage Var. | 3 | VOH Production unit | $ 84.05 | $ 84.05 | $ 88.75 | $ 88.75 | 84.78 | 84.78 | |||||||||||||||||||||||||
| Selling Price Variance | (Actual Selling Price - budget selling price ) x actual units sold | Fixed OH Rate/Hour | $ 13.69 | 0 | $ 13.77 | 0 | $ 13.77 | $ - 0 | |||||||||||||||||||||||||
| FOH Production unit | $ 87.59 | 0 | $ 92.25 | 0 | 88.12 | ||||||||||||||||||||||||||||
| Level 1 | Budget Variance | Var. Operating Exp. | $ 57,262,000 | $ 57,262,000 | $ 57,262,000 | $ 57,262,000 | $ 57,262,000 | $ 57,262,000 | |||||||||||||||||||||||||
| Webb Company | Actual | Budget | Favorable/(Unfavorable) | Fxd. Operating Exp. | $ 116,895,000 | $ 116,895,000 | $ 116,895,000 | $ 116,895,000 | $ 116,895,000 | $ 116,895,000 | |||||||||||||||||||||||
| Amount | Per Unit | Amount | Per Unit | Amount | Per Unit | % | |||||||||||||||||||||||||||
| Units | 10,000 | 12,000 | (2,000) | -16.7% | GAAP | Yes | NO | Yes | NO | Yes | NO | ||||||||||||||||||||||
| Revenue | 1,250,000 | $ 125.00 | 1,440,000 | $ 120.00 | (190,000) | $ 5.00 | -13.2% | ||||||||||||||||||||||||||
| Cost per Unit & Ending Inventory | FAC | Variable | FAC | Variable | Normal = Plan | ||||||||||||||||||||||||||||
| Variable costs | Actual | Actual | Std. | Std | FAC | Variable | |||||||||||||||||||||||||||
| Direct Materials | 621,600 | $ 62.16 | 720,000 | $ 60.00 | 98,400 | $ 2.16 | 13.7% | Raw Materials (Direct Materials) | $ 73.50 | $ 73.50 | $ 77.94 | $ 77.94 | $ 73.50 | $ 73.50 | |||||||||||||||||||
| Direct Labor | 198,000 | $ 19.80 | 192,000 | $ 16.00 | (6,000) | $ 3.80 | -3.1% | Direct Labor | $ 99.20 | $ 99.20 | $ 105.53 | $ 105.53 | $ 99.20 | $ 99.20 | |||||||||||||||||||
| VOH | 130,500 | $ 13.05 | 144,000 | $ 12.00 | 13,500 | $ 1.05 | 9.4% | VOH | $ 84.05 | $ 84.05 | $ 88.75 | $ 88.75 | $ 84.78 | $ 84.78 | |||||||||||||||||||
| Total Variable Costs | 950,100 | $ 95.01 | 1,056,000 | $ 88.00 | 105,900 | $ 7.01 | 10.0% | FOH | $ 87.59 | $ - 0 | $ 92.25 | $ - 0 | $ 88.12 | $ - 0 | |||||||||||||||||||
| Total | $ 344.35 | $ 256.75 | $ 364.46 | $ 272.21 | $ 345.60 | $ 257.48 | |||||||||||||||||||||||||||
| Contribution Margin | 299,900 | $ 29.99 | 384,000 | $ 32.00 | (84,100) | $ (2.01) | -21.9% | ||||||||||||||||||||||||||
| CM% | 24.0% | 26.7% | -2.7% | -10.0% | Beginning Inventory | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | ||||||||||||||||||||||
| Ending Inventory $ | |||||||||||||||||||||||||||||||||
| Fixed Costs | 285,000 | 276,000 | (9,000) | -3.3% | Raw Materials (Direct Materials) | $ 7,350,000 | $ 7,350,000 | $ 7,793,750 | $ 7,793,750 | $ 7,350,000 | $ 7,350,000 | ||||||||||||||||||||||
| Direct Labor | 9,920,000 | 9,920,000 | 10,552,500 | 10,552,500 | 9,920,000 | 9,920,000 | |||||||||||||||||||||||||||
| Operating Income | 14,900 | 108,000 | (93,100) | -86.2% | VOH | 8,405,063 | 8,405,063 | 8,875,000 | 8,875,000 | 8,477,612 | 8,477,612 | ||||||||||||||||||||||
| FOH | 8,759,494 | 0 | 9,225,000 | 0 | 8,811,940 | 0 | |||||||||||||||||||||||||||
| Total | $ 34,434,557 | $ 25,675,063 | $ 36,446,250 | $ 27,221,250 | $ 34,559,552 | $ 25,747,612 | |||||||||||||||||||||||||||
| Favorable/(Unfavorable) | |||||||||||||||||||||||||||||||||
| Level 2 | Sales | Flex | |||||||||||||||||||||||||||||||
| Webb Company | Actual | Budget | Flexible Budget | Volume | Budget | Computational Template | |||||||||||||||||||||||||||
| Amount | Per Unit | Amount | Per Unit | Amount | Per Unit | Variance | Variance | ||||||||||||||||||||||||||
| Units | 10,000 | 12,000 | 10,000 | (2,000) | 0 | Actual | Standard | Normal | |||||||||||||||||||||||||
| 83.3% | Materials | Purchase price | Actual x | Standard x | Actual x | ||||||||||||||||||||||||||||
| Usage per Unit | Actual x | Standard x | Actual x | ||||||||||||||||||||||||||||||
| Revenue | 1,250,000 | $ 125.00 | 1,440,000 | $ 120.00 | 1,200,000 | $ 120.00 | (240,000) | 50,000 | Units | Actual | Actual | Actual | |||||||||||||||||||||
| Variance on P&L | No | Yes | No | ||||||||||||||||||||||||||||||
| Variable costs | Labor | Rate per DL .Hr. | Actual | Standard x | Actual | ||||||||||||||||||||||||||||
| Direct Materials | 621,600 | $ 62.16 | 720,000 | $ 60.00 | 600,000 | $ 60.00 | (120,000) | 21,600 | Hrs, per Unit | Actual | Standard x | Actual | |||||||||||||||||||||
| Direct Labor | 198,000 | $ 19.80 | 192,000 | $ 16.00 | 160,000 | $ 16.00 | (32,000) | 38,000 | Units | Actual | Actual | Actual | |||||||||||||||||||||
| VOH | 130,500 | $ 13.05 | 144,000 | $ 12.00 | 120,000 | $ 12.00 | (24,000) | 10,500 | Variance on P&L | No | Yes | No | |||||||||||||||||||||
| Total Variable Costs | 950,100 | $ 95.01 | 1,056,000 | $ 88.00 | 880,000 | $ 88.00 | (176,000) | 70,100 | Overhead * | Rate per Hr. | Actual | Standard x | Standard x | ||||||||||||||||||||
| Hrs. per Unit | Actual | Standard x | Actual x | ||||||||||||||||||||||||||||||
| Contribution Margin | 299,900 | $ 29.99 | 384,000 | $ 32.00 | 320,000 | $ 32.00 | (64,000) | (20,100) | Units | Actual | Actual | Actual | |||||||||||||||||||||
| CM% | 24.0% | 26.7% | 26.7% | 0.0% | -2.7% | Variance on P&L | No | Yes | Yes | ||||||||||||||||||||||||
| Over/Under absorbed OH | |||||||||||||||||||||||||||||||||
| Fixed Costs | 285,000 | 276,000 | 276,000 | 0 | 9,000 | ||||||||||||||||||||||||||||
| * if Direct Fixed Mfg. OH is recognized then Normal same as DM or DL | |||||||||||||||||||||||||||||||||
| Operating Income | 14,900 | 108,000 | 44,000 | (64,000) | (29,100) | ||||||||||||||||||||||||||||
| Level 3 | Computation of Absorption / Variances | ||||||||||||||||||||||||||||||||
| Selling price variance | FAC | Variable | FAC | Variable | Normal = Plan | ||||||||||||||||||||||||||||
| Actual SP | $ 125.00 | a | Actual | Actual | Std. | Std | FAC | Variable | |||||||||||||||||||||||||
| Budget SP | $ 120.00 | b | Production Units | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | ||||||||||||||||||||||||
| ∆ Selling Price | $ 5.00 | c | a - b | Sales Units | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | |||||||||||||||||||||||
| Actual units | 10,000 | d | DM unit price | $ 7.00 | $ 7.00 | $ 7.25 | $ 7.25 | $ 7.25 | $ 7.25 | ||||||||||||||||||||||||
| DM qty./unit | $ 10.50 | $ 10.50 | $ 10.75 | $ 10.75 | $ 10.50 | $ 10.50 | |||||||||||||||||||||||||||
| Selling Price Variance | $ 50,000 | e | c x d | DM $ /unit | $ 73.50 | $ 73.50 | $ 77.94 | $ 77.94 | $ 73.50 | $ 73.50 | |||||||||||||||||||||||
| Total | 145,162,500 | 145,162,500 | 153,926,563 | 153,926,563 | 145,162,500 | 145,162,500 | |||||||||||||||||||||||||||
| Variance (Fav)/Unfav | (8,764,063) | (8,764,063) | - 0 | - 0 | |||||||||||||||||||||||||||||
| Sales volume variance | |||||||||||||||||||||||||||||||||
| Budget CM$/unit | $ 32.00 | f | DL Hrs per unit | $ 6.40 | $ 6.40 | $ 6.70 | $ 6.70 | $ 6.40 | $ 6.40 | ||||||||||||||||||||||||
| ∆ Units | (2,000) | g | $/DL Hr. | $ 15.50 | $ 15.50 | $ 15.75 | $ 15.75 | $ 15.50 | $ 15.50 | ||||||||||||||||||||||||
| Variance | (64,000) | h | g x f | DL$ Unit | $ 99.20 | $ 99.20 | $ 105.53 | $ 105.53 | $ 99.20 | $ 99.20 | |||||||||||||||||||||||
| Actual | Budget | Total: | 195,920,000 | 195,920,000 | 208,411,875 | 208,411,875 | 195,920,000 | 195,920,000 | |||||||||||||||||||||||||
| Sales Mix Variance | PL1 | 40% | PL1 | 50% | Variance (Fav)/Unfav | (12,491,875) | (12,491,875) | - 0 | - 0 | ||||||||||||||||||||||||
| ∆ CM% due to Mix | -1.2% | i | PL2 | 60% | Pl2 | 50% | |||||||||||||||||||||||||||
| Actual sales | 1,250,000 | j | PL1 CM% | 29.5% | PL1 CM% | 28.7% | Absorption for Std. or COGS for Actual | Absorbed | Absorbed | Absorbed | Absorbed | ||||||||||||||||||||||
| Mix variance | (15,250) | I x j | PL 2 CM% | 22.8% | PL 2 CM% | 24.7% | VOH Unit | $ 84.05 | $ 84.05 | $ 88.75 | $ 88.75 | $ 84.78 | $ 84.78 | ||||||||||||||||||||
| CM% | 25.48% | CM% | 26.70% | FOH Unit | $ 87.59 | $ - 0 | $ 92.25 | $ - 0 | $ 88.12 | $ - 0 | |||||||||||||||||||||||
| VOH: Manufacturing | $ 166,000,000 | $ 166,000,000 | $ 175,281,250 | $ 175,281,250 | $ 167,432,836 | $ 167,432,836 | |||||||||||||||||||||||||||
| Sales Quantity variance | FOH: Manufacturing | $ 173,000,000 | $ 173,000,000 | $ 182,193,750 | $ - 0 | $ 174,035,821 | $ - 0 | ||||||||||||||||||||||||||
| Sales volume variance | (64,000) | Actual ASP | $ 125.00 | ||||||||||||||||||||||||||||||
| Mix variance | (15,250) | Budget ASP | $ 120.00 | (Over)/Under Absorbed | |||||||||||||||||||||||||||||
| Quantity Variance | (48,750) | ∆ ASP | $ 5.00 | VOH Variance | (9,281,250) | (9,281,250) | (1,432,836) | (1,432,836) | |||||||||||||||||||||||||
| Actual Units | 10,000 | FOH Variance | (9,193,750) | (1,035,821) | |||||||||||||||||||||||||||||
| Sales Price Variance | 50,000 | Sale Price Variance | $ 50,000 | ||||||||||||||||||||||||||||||
| Sales Mix Variance | (15,250) | a | |||||||||||||||||||||||||||||||
| Sales Quantity variance | (48,750) | b | |||||||||||||||||||||||||||||||
| Sales volume variance | (64,000) | a + b = c | Statement of Income | ||||||||||||||||||||||||||||||
| Flex budget variance | (29,100) | d | |||||||||||||||||||||||||||||||
| Total variance | (93,100) | c + d | FAC | Variable | FAC | Variable | Normal = Plan | ||||||||||||||||||||||||||
| Actual | Actual | Std. | Std | FAC | Variable | ||||||||||||||||||||||||||||
| Level 3 | Units Produced | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | 1,975,000 | ||||||||||||||||||||||||||
| Input Variances: | Units Sold | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | 1,875,000 | ||||||||||||||||||||||||||
| Net Revenue | $ 984,375,000 | $ 984,375,000 | $ 984,375,000 | $ 984,375,000 | $ 984,375,000 | $ 984,375,000 | |||||||||||||||||||||||||||
| Sales Price Variance | 50,000 | Cost of Goods Sold | |||||||||||||||||||||||||||||||
| Material | 137,812,500 | 137,812,500 | 137,812,500 | 137,812,500 | |||||||||||||||||||||||||||||
| Direct Materials | 0 | Labor | 186,000,000 | 186,000,000 | 186,000,000 | 186,000,000 | |||||||||||||||||||||||||||
| Direct Labor | 0 | Variable Overhead | 157,594,937 | 157,594,937 | |||||||||||||||||||||||||||||
| VOH | 0 | Fixed Overhead | 164,240,506 | - 0 | |||||||||||||||||||||||||||||
| Standard Material | 146,132,813 | 146,132,813 | |||||||||||||||||||||||||||||||
| Unit of measure► | Sq.yards | Hours | Standard Labor | 197,859,375 | 197,859,375 | ||||||||||||||||||||||||||||
| Budget input Qty per Unit | 2 | 0.80 | z | data | Standard VOH | 166,406,250 | 166,406,250 | 158,955,224 | 158,955,224 | ||||||||||||||||||||||||
| Direct | Direct | Standard Fxd.OH | 172,968,750 | - 0 | 165,223,881 | - 0 | |||||||||||||||||||||||||||
| Materials | Labor | Ref# | Formula | Material variance | (8,764,063) | (8,764,063) | - 0 | - 0 | |||||||||||||||||||||||||
| Actual Input Quantity | 22,200 | 9,000 | a | data | Labor variance | (12,491,875) | (12,491,875) | - 0 | - 0 | ||||||||||||||||||||||||
| Actual Input Unit Price | $ 28.00 | $ 22.00 | b | data | VOH (Over)/ Under Abs. | (9,281,250) | (9,281,250) | (1,432,836) | (1,432,836) | ||||||||||||||||||||||||
| Actual Total input cost | 621,600 | 198,000 | c | a x b | FXD OH (Over) under Absorbed | (9,193,750) | (1,035,821) | ||||||||||||||||||||||||||
| Actual Units | 10,000 | 10,000 | d | data | Total COGS | 645,647,943 | 481,407,437 | 643,636,250 | 479,861,250 | 645,522,948 | 481,334,888 | ||||||||||||||||||||||
| Budget units | 12,000 | 12,000 | e | data | * | ||||||||||||||||||||||||||||
| Budgeted Input Unit Price | $ 30.00 | $ 20.00 | f | data | Gross Margin | 502,967,563 | 504,513,750 | 503,040,112 | |||||||||||||||||||||||||
| Act. Input qty. x Budget unit Price | 666,000 | 180,000 | g | a x f | Gross Profit | 338,727,057 | 340,738,750 | 338,852,052 | |||||||||||||||||||||||||
| Flex Input Costs | 600,000 | 160,000 | h | d x f x z | Variable Operating Expense | 57,262,000 | 57,262,000 | 57,262,000 | |||||||||||||||||||||||||
| Contribution Margin | 445,705,563 | - 0 | 447,251,750 | - 0 | 445,778,112 | ||||||||||||||||||||||||||||
| Favorable/(Unfavorable) | Price Variance | 44,400 | (18,000) | i | g - c | ||||||||||||||||||||||||||||
| Favorable/(Unfavorable) | Efficiency-Usage Variance | (66,000) | (20,000) | j | h - g | ( a x ( d x z )) x f | Fixed Manufacturing Costs | 173,000,000 | 173,000,000 | 173,000,000 | |||||||||||||||||||||||
| Favorable/(Unfavorable) | Flex budget Variance | (21,600) | (38,000) | k | I + j | Fixed Operating Expense | 116,895,000 | 116,895,000 | 116,895,000 | ||||||||||||||||||||||||
| Total Operating Expense | 174,157,000 | 174,157,000 | 174,157,000 | ||||||||||||||||||||||||||||||
| Operating Income | $ 164,570,057 | $ 155,810,563 | $ 166,581,750 | $ 157,356,750 | $ 164,695,052 | $ 155,883,112 | |||||||||||||||||||||||||||
| Summary | |||||||||||||||||||||||||||||||||
| Variance | * = If Material portion of variances capitalized to Inventory | ||||||||||||||||||||||||||||||||
| Actual | Time phasing of variances incurred not considered in this example | ||||||||||||||||||||||||||||||||
| to | |||||||||||||||||||||||||||||||||
| Budget | (Fav)/Unfav | ||||||||||||||||||||||||||||||||
| Variances | |||||||||||||||||||||||||||||||||
| Revenue | (190,000) | Material variance | (8,764,063) | ||||||||||||||||||||||||||||||
| Labor variance | (12,491,875) | ||||||||||||||||||||||||||||||||
| Variable costs | VOH (Over)/ Under Abs. | (9,281,250) | |||||||||||||||||||||||||||||||
| Direct Materials | 98,400 | FXD OH (Over) under Absorbed | (9,193,750) | ||||||||||||||||||||||||||||||
| Direct Labor | (6,000) | Total: | (39,730,938) | ||||||||||||||||||||||||||||||
| VOH | 13,500 | ||||||||||||||||||||||||||||||||
| Total Variable Costs | 105,900 | Ending Inventory Units | 100,000 | ||||||||||||||||||||||||||||||
| Total annual Production | 1,975,000 | ||||||||||||||||||||||||||||||||
| Contribution Margin | (84,100) | Flexible Budget Variance | % production on-hand | 5.06% | |||||||||||||||||||||||||||||
| CM% | (0) | Sales | Selling | Flexible | Usage | ||||||||||||||||||||||||||||
| Volume | Price | Budget | Price | Efficiency | Flexible | Variances capitalized if material | (2,011,693) | debit COGS, credit inventory | |||||||||||||||||||||||||
| Fixed Costs | (9,000) | Variance | Variance | Variance | Variance | Variance | Budget | Standard Format Operating Income B4 variance recap | $ 166,581,750 | ||||||||||||||||||||||||
| Adjusted Standard Operating Income for recap | 164,570,057 | equals | Operating Income at actual | ||||||||||||||||||||||||||||||
| Operating Income | (93,100) | (64,000) | (29,100) | (93,100) | % change | -1.21% | |||||||||||||||||||||||||||
| Inventory @ Standard | $ 36,446,250 | ||||||||||||||||||||||||||||||||
| Revenue | 50,000 | Inventory at Std. Adjusted for Adjusted for recap | 34,434,557 | ||||||||||||||||||||||||||||||
| % change | -5.52% | ||||||||||||||||||||||||||||||||
| Direct Materials | 44,400 | (66,000) | (21,600) | ||||||||||||||||||||||||||||||
| Direct Labor | (18,000) | (20,000) | (38,000) | Inventory @ Actual | $ 34,434,557 | ||||||||||||||||||||||||||||
| VOH | (10,500) | (10,500) | Inventory at Std. B4 variance recap | $ 34,434,557 | |||||||||||||||||||||||||||||
| Total Variable Costs | 50,000 | (10,500) | 26,400 | (86,000) | (20,100) | Inventory at actual = the inventory at standard adjusted to recap variances | |||||||||||||||||||||||||||
| Fixed Costs | (9,000) | (9,000) | Second Example | ||||||||||||||||||||||||||||||
| Operating Income | (64,000) | 50,000 | (19,500) | 26,400 | (86,000) | (29,100) | Product ABC3 | ||||||||||||||||||||||||||
| Actual | Standard to set OH rates | ||||||||||||||||||||||||||||||||
| Production | 5,500 | 5,850 | Basis DL Hours | ||||||||||||||||||||||||||||||
| Std. | Actual | Standard | Actual | Normal | |||||||||||||||||||||||||||||
| Other Variances | BOM | Standard | Standard | Actual | price | price | $s | $s | $s | ||||||||||||||||||||||||
| Quantity/Ea | Quantity/Ea | Consumption | Consumption | Each | each | to Inventory | Consumption | Consumption | |||||||||||||||||||||||||
| Market Share Variance | Aableticks | 6.000 | 6.030 | 33,165 | 34,120 | $ 4.2300 | $ 4.2000 | 140,288 | 143,304 | 143,304 | |||||||||||||||||||||||
| Actual Market Size | 7,500,000 | m | data | Plastic sizers | 12.000 | 12.580 | 69,190 | 70,500 | 0.0550 | 0.0590 | 3,805 | 4,160 | 4,160 | ||||||||||||||||||||
| Budget Market Size | 7,575,000 | n | data | Frames | 1.000 | 1.001 | 5,506 | 5,522 | 12.2500 | 13.1200 | 67,442 | 72,449 | 72,449 | ||||||||||||||||||||
| Actual Revenue | 1,250,000 | p | data | fastener | 44.000 | 49.000 | 269,500 | 261,250 | 0.0006 | 0.0006 | 162 | 157 | 157 | ||||||||||||||||||||
| Actual Market Share | 16.7% | q | p / m | ||||||||||||||||||||||||||||||
| Budget CM% | 26.7% | r | data | Hours or per Hr. | |||||||||||||||||||||||||||||
| Budget Revenue | 1,440,000 | s | data | Direct Labor | 3.61 | 3.98 | 21,890 | 21,450 | 12.75 | 13.10 | 70,125 | 72,050 | 72,050 | ||||||||||||||||||||
| Budget Market Share | 19.0% | t | s / n | ||||||||||||||||||||||||||||||
| Actual CM$ | 299,900 | u | data | VOH Spending | 373,336 | Actual Hrs. each | 351,000 | 337,194 | 337,194 | ||||||||||||||||||||||||
| Flex market share CM$ | 333,333 | v | m x q x r | FOH Spending | 493,527 | 3.90 | 464,000 | 410,253 | 410,253 | ||||||||||||||||||||||||
| Actual market @ budget share-CM% | 380,198 | w | m x t r | VOH/Hr. | $ 16.03 | $ 15.72 | 343,945 | ||||||||||||||||||||||||||
| Budget CM$ | 384,000 | z | data | FOH/Hr. | $ 21.20 | $ 19.13 | 454,673 | ||||||||||||||||||||||||||
| Market Share Variance | (46,865) | x | v - w | VOH/Unit | $ 63.82 | $ 61.31 | 351,000 | ||||||||||||||||||||||||||
| Market Size Variance | (3,802) | y | w - z | FOH/Unit | $ 84.36 | $ 74.59 | 464,000 | ||||||||||||||||||||||||||
| Sale Quantity Variance | (50,667) | aa | x + y | ||||||||||||||||||||||||||||||
| Normal | Std. | Actual | |||||||||||||||||||||||||||||||
| Mix Variance | Unit Cost | Material | $ 40.01 | 38.49 | 40.01 | ||||||||||||||||||||||||||||
| Materials | DL | Labor | 50.75 | 50.75 | 50.75 | ||||||||||||||||||||||||||||
| Efficeincy Variance: | (66,000) | (20,000) | VOH | 62.54 | $ 63.82 | $ 61.31 | |||||||||||||||||||||||||||
| FOH | 82.67 | $ 84.36 | $ 74.59 | ||||||||||||||||||||||||||||||
| Total Budget Units of Input | 12,000 | ba | data | Total | $ 235.96 | $ 237.42 | $ 226.66 | ||||||||||||||||||||||||||
| Actual unit of Input | 10,000 | bb | data | ||||||||||||||||||||||||||||||
| Budgeted PL1 Unitts % | 50.0% | bc | data | ||||||||||||||||||||||||||||||
| Budget PL2 Units % | 50.0% | bd | data | ||||||||||||||||||||||||||||||
| Budget input unit per unit PL1 | 1.5 | be | data | ||||||||||||||||||||||||||||||
| Budget input unit per unit PL2 | 2.5 | bf | data | ||||||||||||||||||||||||||||||
| Actual PL1 Units % | 45.0% | bg | data | ||||||||||||||||||||||||||||||
| Actual PL2 Units % | 55.0% | bh | data | ||||||||||||||||||||||||||||||
| Busgeted input units for Actual Units out | 20,000 | bi | (bb x bc x be) + (bb x bd x bf) | ||||||||||||||||||||||||||||||
| Actual.input units-Bud.mix bud price | 20,500 | bj | (bb x bg x be) + (bb x bh x bf) | ||||||||||||||||||||||||||||||
| Budgeted input price | $ 30.00 | bk | data | ||||||||||||||||||||||||||||||
| Mix Varaince $s | (15,000) | bl | (bi - bj) x bk | Changed only mix | |||||||||||||||||||||||||||||
| Yield variance $ | (51,000) | bn | bp - bl | ||||||||||||||||||||||||||||||
| Efficienct variance$ | (66,000) | bp | above | ||||||||||||||||||||||||||||||
This is not for ACC 220
Ch.10 StdCost
| Efficiency Variances | |||||||||||||||||||||||||||||||
| Materials: | |||||||||||||||||||||||||||||||
| ECN Engineering change notice | |||||||||||||||||||||||||||||||
| Engineering change to Bill-of-materials | |||||||||||||||||||||||||||||||
| Scrap variance | |||||||||||||||||||||||||||||||
| Production not to specifications | |||||||||||||||||||||||||||||||
| Vendor material not to specifications | |||||||||||||||||||||||||||||||
| Usage Variance | |||||||||||||||||||||||||||||||
| Qty. usage exceeds allowance net of other variances | |||||||||||||||||||||||||||||||
| Direct Labor | |||||||||||||||||||||||||||||||
| Productivity: Downtimes | |||||||||||||||||||||||||||||||
| Material shortages | |||||||||||||||||||||||||||||||
| Process downtime | |||||||||||||||||||||||||||||||
| Engineering change to process | |||||||||||||||||||||||||||||||
| Efficiency | |||||||||||||||||||||||||||||||
| time on productive activity compare with | |||||||||||||||||||||||||||||||
| time allowed to produce | |||||||||||||||||||||||||||||||
| Excel 1 | Each | per X33 | Ea.subass'y | Table | 21390 | ||||||||||||||||||||||||||
| Bill of Material: X33 Table | Waste | Subassy. | Std. | Material | Material | 3.8 | 41400 | ||||||||||||||||||||||||
| Scrap | Std. | Total | Std. | Std. | Std. | 11020 | 62790 | ||||||||||||||||||||||||
| P/N | Item | UM | Qty | Allow | Usage | Usage | Price | Cost ea. | Cost ea. | 20680 | 9.100 | ||||||||||||||||||||
| AA2 | Top Assembly | unit | 1 | 0% | 1 | 42471 | 60060 | ||||||||||||||||||||||||
| a77 | Metal frame | unit | 1 | 0.50% | 1.005 | 1.005 | $ 11.00 | $ 11.06 | $ 11.055 | 45191 | 14600 | ||||||||||||||||||||
| l22 | Laminate cover | sq.' | 10 | 2% | 10.200 | 10.200 | $ 0.75 | $ 7.65 | $ 7.650 | 1212 | 3500 | ||||||||||||||||||||
| s44 | side trim | linear ft. | 9.2 | 4% | 9.568 | 9.568 | $ 0.22 | $ 2.10 | $ 2.105 | 2952 | 6700 | ||||||||||||||||||||
| t51 | top cover | sq.' | 10 | 1% | 10.100 | 10.100 | $ 4.25 | $ 42.93 | $ 42.925 | 4634 | 84860 | ||||||||||||||||||||
| LL2 | Leg assemblies | unit | 4 | 0 | 4 | 909 | |||||||||||||||||||||||||
| M98 | Metal tubing | linear ft. | 3 | 6% | 3.180 | 12.720 | $ 1.89 | $ 6.01 | $ 24.041 | 3024 | |||||||||||||||||||||
| FF8 | end tabs | unit | 1 | 0.40% | 1.004 | 4.016 | $ 0.04 | $ 0.04 | $ 0.161 | 4403 | |||||||||||||||||||||
| 44631 | |||||||||||||||||||||||||||||||
| Total | $ 87.936 | Cost | 51471 | ||||||||||||||||||||||||||||
| 3.01 | |||||||||||||||||||||||||||||||
| Excel 2 | |||||||||||||||||||||||||||||||
| Time & motion | |||||||||||||||||||||||||||||||
| Engineered | Budget | Number | Ea.subass'y | Table | |||||||||||||||||||||||||||
| Process [Router] | Labor | std. time | Allow | 100% | Prior | Period | of minutes | Labor Hr. | Labor | Labor | |||||||||||||||||||||
| For simplicity 1-step assembly - may be many steps | per ass'y | Time | Std. | Period | Prod.% | Std. | Std. | Std. | Std. | ||||||||||||||||||||||
| Qty per | UM | Qty | PFD | Time | Productivity | for Std. | Minutes | Price | Cost ea. | Cost ea. | |||||||||||||||||||||
| 4 | LL2 | Leg assemblies | Minutes | 6.0 | 12% | 6.8181818182 | 89% | 93% | 7.331 | $ 12.00 | $ 1.466 | $ 5.865 | 4 | per table | |||||||||||||||||
| 1 | AA2 | Top Assembly | Minutes | 11.5 | 12% | 13.068 | 92% | 94% | 13.9023210832 | $ 14.75 | $ 3.418 | $ 3.418 | 1 | per table | |||||||||||||||||
| Can | |||||||||||||||||||||||||||||||
| 6.0 | 89% | Use | +G46/(1-H46) | Total | $ 9.283 | Cost | |||||||||||||||||||||||||
| This | 6 / (1 - 12%) | ||||||||||||||||||||||||||||||
| Variable OH | 4 | LL2 | 7.331 | 29.326 | |||||||||||||||||||||||||||
| 1 | AA2 | 13.902 | 13.902 | VOH rate/dl.hr. | |||||||||||||||||||||||||||
| Minutes | 43.228 | $ 6.667 | $ 4.803 | VOH per | X33 | ||||||||||||||||||||||||||
| Given in example | . | ||||||||||||||||||||||||||||||
| Excel 3 | |||||||||||||||||||||||||||||||
| ColaCo | Example: Overhead Variances Apx. | ||||||||||||||||||||||||||||||
| Std. each | Qty. 200 units | ||||||||||||||||||||||||||||||
| Production and Machine-Hour Data | .45 lbs. /unit | Actual | |||||||||||||||||||||||||||||
| Budgeted production | 30,000 | units | $2.60 per lb | 100 lbs | |||||||||||||||||||||||||||
| Standard machine-hours per unit | Std. | 3.00 | hours | 90 lbs. total std | $295 | ||||||||||||||||||||||||||
| Budgeted machine-hours | 90,000 | hours | $234.00 | = .50 ilbs./unit | |||||||||||||||||||||||||||
| Actual production | 28,000 | units | each | 3.00 | = $2.95/unit | ||||||||||||||||||||||||||
| Standard machine-hours allowed for the actual production | 84,000 | hours | act @ std Q | made | 28,000 | ∆ price/lb | $0.35 | ||||||||||||||||||||||||
| Actual machine-hours | 88,000 | hours | ∆ lbs. unit | 0.05 | |||||||||||||||||||||||||||
| Cost / Spending Data | Quantity/Efficiency/Productivy | ||||||||||||||||||||||||||||||
| BUDGET: | Rate per machine hour | 0.05 | 200 | 10 | $2.60 | $26.00 | |||||||||||||||||||||||||
| Budgeted VOH -variable manufacturing overhead | $ 90,000 | $1.000 | Std. | 90000 | X | $ 1.000 | ∆ Qty. each | std | |||||||||||||||||||||||
| Budgeted F MFG. OH-fixed manufacturing overhead | 270,000 | $3.000 | Std. | $ 270,000 | / | 90,000 | or | 10 lbs X | $26.00 | = $26.00 | |||||||||||||||||||||
| Total budgeted manufacturing overhead | $ 360,000 | $4.000 | Std. | $ 1.000 | + | $ 3.000 | |||||||||||||||||||||||||
| ACTUAL: | Rate per Actual hour | Price | |||||||||||||||||||||||||||||
| Actual variable manufacturing overhead | given | $ 100,000 | $1.136 | $ 100,000 | / | 88,000 | 0.35 | 100.00 | $35.00 | ||||||||||||||||||||||
| Actual fixed manufacturing overhead | given | 280,000 | $3.182 | $ 280,000 | / | 88,000 | ∆ Price/lb. | Actual | |||||||||||||||||||||||
| Total actual manufacturing overhead | $ 380,000 | $4.318 | |||||||||||||||||||||||||||||
| Act. OH Rate | $61.00 | ||||||||||||||||||||||||||||||
| FLEX budget for Volume | Mfg. OH | ||||||||||||||||||||||||||||||
| Units | std hrs for act. Qty. | 84,000 | |||||||||||||||||||||||||||||
| Variable OH | $ 84,000 | $ 1.000 | Budget rate | ||||||||||||||||||||||||||||
| Fixed OH | $ 270,000 | fixed | 252000 | ||||||||||||||||||||||||||||
| Total | $ 354,000 | Act. @ Std. | |||||||||||||||||||||||||||||
| $ @ Std | $ 354,000 | Budget Flex.d | |||||||||||||||||||||||||||||
| Applied or Standard or Absorbed overhead-Mfg.OH | $/Driver--Rate | # Hrs. | Act. FG Qty | w. Act. Qty | $ 380,000 | Actual | |||||||||||||||||||||||||
| Units | std hrs for act. Qty. | 84,000 | 3.00 | 28000 | $ 26,000 | Variance | |||||||||||||||||||||||||
| Variable OH | $ 84,000 | $1.000 | 3.00 | 28000 | $84,000 | ||||||||||||||||||||||||||
| Fixed OH | $ 252,000 | $3.000 | 3.00 | 28000 | $252,000 | ||||||||||||||||||||||||||
| Total | $ 336,000 | $4.000 | $336,000 | ||||||||||||||||||||||||||||
| into inventory at STD. | |||||||||||||||||||||||||||||||
| Excel 4 | |||||||||||||||||||||||||||||||
| Budget vs. Actual | Variable Overhead | ||||||||||||||||||||||||||||||
| Managerial Accounting: | Variable | Fixed | Total | ||||||||||||||||||||||||||||
| Plan | $ 90,000 | $ 270,000 | $ 360,000 | ||||||||||||||||||||||||||||
| FLEX | $ 84,000 | $ 270,000 | $ 354,000 | ||||||||||||||||||||||||||||
| Actual | $ 100,000 | $ 280,000 | $ 380,000 | ||||||||||||||||||||||||||||
| Fav/[Unfav] | Volume | $ 6,000 | $ - 0 | $ 6,000 | Fav | spend less | |||||||||||||||||||||||||
| Fav/[Unfav] | Spending | $ (16,000) | $ (10,000) | $ (26,000) | UnFav | Spend more | check | ||||||||||||||||||||||||
| Total/Net variances | $ (10,000) | $ (10,000) | $ (20,000) | UnFav | Spend more | 90,000 | Budget Qty | ||||||||||||||||||||||||
| 84,000 | Std Qty. Actual Prodctn. | ||||||||||||||||||||||||||||||
| Actual vs. Applied | (6,000) | difference | |||||||||||||||||||||||||||||
| Financial Accounting | Variable | Fixed | Total | Units | $ 4.000 | Std. Rate | |||||||||||||||||||||||||
| Actual | $ 100,000 | $ 280,000 | $ 380,000 | 88,000 | $ 1.136 | $ 1.000 | $ (24,000) | under absorded at Std | |||||||||||||||||||||||
| Applied or Standard or Absorbed overhead-Mfg.OH | $ 84,000 | $ 252,000 | $ 336,000 | 84,000 | Fav/(Unfav) | 88,000 | 84,000 | $ 6,000 | volume | ||||||||||||||||||||||
| Rate variance | $ (12,000) | $ (12,000) | (0.136) | ∆ rate. X act.hrs. | $ (26,000) | spending | |||||||||||||||||||||||||
| Efficiency variance | $ (4,000) | $ (4,000) | (4000) | ∆ Hrs. X std. rate | $ (44,000) | sum | |||||||||||||||||||||||||
| Spending or budget variance | $ (10,000) | $ (10,000) | ∆ Actual Spdg - Applied OH | ||||||||||||||||||||||||||||
| Fixed overhead volume variance Applied/Absorption variance | $ (18,000) | $ (18,000) | ∆ Budget or Plan Spending - Actual spdg. OR ∆ Hrs. Budget - std hrs X std.rate | $ 252,000 | $ (270,000) | $ (18,000) | |||||||||||||||||||||||||
| Total/Net variances | $ (44,000) | ||||||||||||||||||||||||||||||
| $ (28,000) | BUDGET: | ACTUAL: | |||||||||||||||||||||||||||||
| 270,000 | 280,000 | ||||||||||||||||||||||||||||||
| (10,000) | |||||||||||||||||||||||||||||||
| BUDGET: | Applied or Standard or Absorbed overhead-Mfg.OH | ||||||||||||||||||||||||||||||
| 90,000 | 84,000 | (6,000) | |||||||||||||||||||||||||||||
| $ 3.000 | std fxd rate | ||||||||||||||||||||||||||||||
| (18,000) | |||||||||||||||||||||||||||||||
| Excel 5 | |||||||||||||||||||||||||||||||
| Doing the Accounting with Standard Costs | |||||||||||||||||||||||||||||||
| Only standard material costs enter inventory | |||||||||||||||||||||||||||||||
| Purchase price variances on materials are removed at receipt | |||||||||||||||||||||||||||||||
| Only standard material costs move through inventory | |||||||||||||||||||||||||||||||
| variances are removed at each stage of production | |||||||||||||||||||||||||||||||
| Only std. labor & OH are input to inventory | |||||||||||||||||||||||||||||||
| Labor rate variances are removed at payroll/accrued P/R | |||||||||||||||||||||||||||||||
| Only std. labor & OH are input to inventory | |||||||||||||||||||||||||||||||
| variances are removed at each stage of production | |||||||||||||||||||||||||||||||
| Quarter 2 Year 2xx1 | |||||||||||||||||||||||||||||||
| Materials Received | DR | CR | DR | CR | |||||||||||||||||||||||||||
| material purchased at std. value | Matl. Inventory | 500 | |||||||||||||||||||||||||||||
| material purchased at actual cost | A/P | 525 | |||||||||||||||||||||||||||||
| Difference std - to actual | variance acctg in CoGS | 25 | |||||||||||||||||||||||||||||
| if Act > std | If std > act | unfav.var. | |||||||||||||||||||||||||||||
| Materials Used | DR | CR | DR | CR | |||||||||||||||||||||||||||
| Materials into WIP @ std. | WIP | 615 | |||||||||||||||||||||||||||||
| Materials into WIP @ std. | Matl. Inventory | 615 | |||||||||||||||||||||||||||||
| Std. matl in Production Completed | FG | 600 | |||||||||||||||||||||||||||||
| Matl. @ std. used in Production Completed | WIP | 615 | |||||||||||||||||||||||||||||
| Difference std - to actual | variance acctg in CoGS | 15 | |||||||||||||||||||||||||||||
| if Act > std Unfav | If std > act | unfav.var. | |||||||||||||||||||||||||||||
| Labor Used | DR | CR | DR | CR | |||||||||||||||||||||||||||
| Direct labor Paid | WIP | 375 | |||||||||||||||||||||||||||||
| DL paid @ std. rate | FG | 382 | |||||||||||||||||||||||||||||
| DL rate variance | 7 | ||||||||||||||||||||||||||||||
| Difference std - to actual | FAV variance acctg in CoGS | FAV | |||||||||||||||||||||||||||||
| if Act > std Unfav | If std > act: FAV | ||||||||||||||||||||||||||||||
| Production Completed | FG | 402 | |||||||||||||||||||||||||||||
| Production Completed | WIP | 423 | |||||||||||||||||||||||||||||
| Difference std - to actual | variance acctg in CoGS | 21 | |||||||||||||||||||||||||||||
| unfav.var. | |||||||||||||||||||||||||||||||
| if Act > std Unfav | If std > act: FAV | ||||||||||||||||||||||||||||||
| OVERHEAD above example | DR | CR | |||||||||||||||||||||||||||||
| Incurred Actual Expenses | $ 380,000 | Spending accts. | |||||||||||||||||||||||||||||
| Expense accounts [variance acct. for applies OH] in CoGS | $ 380,000 | ||||||||||||||||||||||||||||||
| A/p, Cash, Accrued etc. | |||||||||||||||||||||||||||||||
| Apply or Absorb OH to production | |||||||||||||||||||||||||||||||
| Inventory | $ 336,000 | aborption accts | |||||||||||||||||||||||||||||
| Variance account in CoGS | $ 336,000 | ||||||||||||||||||||||||||||||
| The result is a variance in CoGS of the difference of $380K dr. & $336K credit | |||||||||||||||||||||||||||||||
| a $44K un fav Variance | |||||||||||||||||||||||||||||||
| Capitalized Variances: Variance Recorded in CoGS, if material then portion is to be capitalized into inventory | |||||||||||||||||||||||||||||||
| Production Variances: | $000 | ||||||||||||||||||||||||||||||
| Material | $15 | Unfav | Days inventory on-hand at QE | ||||||||||||||||||||||||||||
| Labor | $21 | Unfav | 50 | ||||||||||||||||||||||||||||
| OH | $44 | Unfav | Days of Qtr | ||||||||||||||||||||||||||||
| $80 | Unfav | 90 | |||||||||||||||||||||||||||||
| 55.6% | |||||||||||||||||||||||||||||||
| % of variances incurrred in inventory | 55.6% | ||||||||||||||||||||||||||||||
| Net variances | $80 | ||||||||||||||||||||||||||||||
| Variances into inventory - WIP & FG | 44.4 | Unfav | Dr. Inventory | ||||||||||||||||||||||||||||
| Cr. CoGS | |||||||||||||||||||||||||||||||
| RM similar computations |
ACC220---Ch.10 Std Cost---HCT---&P of &N---&D,&T---&F,&A
Ch.13 CapX
| Chapter 13 Capital Budgeting | Excel 1 | ||||||||||||||||||||||||||||
| Cost | $ 3,170 | data | Year | $ | PV$ | ||||||||||||||||||||||||
| Life | 4 years | 0 | $ (3,170) | $ (3,170) | |||||||||||||||||||||||||
| Salvage value | zero | 1 | $ 1,000 | $ 909 | |||||||||||||||||||||||||
| Increase in annual cash inflows AT | 1,000 | 2 | $ 1,000 | $ 826 | |||||||||||||||||||||||||
| given | Hurdle rate | 10.0% | 3 | $ 1,000 | $ 751 | ||||||||||||||||||||||||
| Residual | 0.0 | 4 | $ 1,000 | $ 683 | |||||||||||||||||||||||||
| $ (0) | $ (0) | ||||||||||||||||||||||||||||
| initial [0] | 1 | 2 | 3 | 4 | Year | ||||||||||||||||||||||||
| Buy Machine | (3,170) | ||||||||||||||||||||||||||||
| Cash inflow | 1,000 | 1,000 | 1,000 | 1,000 | No outflows | ||||||||||||||||||||||||
| Net cash flow | (3,170) | 1,000 | 1,000 | 1,000 | 1,000 | ||||||||||||||||||||||||
| net nominal cash flow | (3,170) | 1,000 | 1,000 | 1,000 | 1,000 | (0.13) | |||||||||||||||||||||||
| discounted each year | (3,170) | 909 | 826 | 751 | 683 | 3,170 | |||||||||||||||||||||||
| 1000/(1+10%)^1 | 1000/(1+10%)^3 | ||||||||||||||||||||||||||||
| Sum of discounted cash flows + initial | (0) | 1000/(1+10%)^2 | 1000/(1+10%)^4 | ||||||||||||||||||||||||||
| Formula | (0.13) | =NPV(C6,D13:G13)+C13 | |||||||||||||||||||||||||||
| Cost of Capital | PE on | WACC | |||||||||||||||||||||||||||
| Excel 2 | Additional | Future | Weighted Cost of Capital | ||||||||||||||||||||||||||
| $billion | Interst rate | PE now | earnings | ||||||||||||||||||||||||||
| Debt | 50 | 8.0% | 0.25 | 2.0% | |||||||||||||||||||||||||
| Market cap | 150 | 18 | 14.5 | 0.75 | 5.2% | Hurdle without risk adjustment | |||||||||||||||||||||||
| 5.6% | 6.9% | 7.2% | |||||||||||||||||||||||||||
| PRETAX basis | 7.2% | ||||||||||||||||||||||||||||
| 10.2% | |||||||||||||||||||||||||||||
| Hurdle Rate | 10.2% | 70% average cost of capital/ 30% negative | 70% | Risk adjustment | |||||||||||||||||||||||||
| 30% failure | success | ||||||||||||||||||||||||||||
| Risk factors vary: productivity project risk may be lower than new product risk | |||||||||||||||||||||||||||||
| Lester | Cost and revenue information | Excel 3 | |||||||||||||||||||||||||||
| Excel 3 | Cost of special equipment | $160,000 | |||||||||||||||||||||||||||
| Working capital required | 100,000 | Tax | |||||||||||||||||||||||||||
| Relining equipment in 3 years | 30,000 | rate given as | |||||||||||||||||||||||||||
| Salvage value of equipment in 5 years | 5,000 | 25% | |||||||||||||||||||||||||||
| TAX RATE | Annual cash revenue and costs: | ||||||||||||||||||||||||||||
| CONSIDERS | Sales revenue from parts | 803,300 | |||||||||||||||||||||||||||
| DEDUCTION OF | Cost of parts sold | 400,000 | |||||||||||||||||||||||||||
| DEPRECIATION | Salaries, shipping, etc. | 270,000 | 133,300 | profit B4 tax | 75% | Profitability | |||||||||||||||||||||||
| EXPENSE | Tax Rate = | 25% | 99,975 | Profit after tax | index | ||||||||||||||||||||||||
| NOT COVERED | $ 260,000 | Initial investment | |||||||||||||||||||||||||||
| THIS CHAPTER | Hurdle rate: | 10% | $ 161,641 | PV | |||||||||||||||||||||||||
| If WC now | By hand | 62.2% | |||||||||||||||||||||||||||
| Period | Equipment | WC | Profit | Net Cash Flow | PV by Year | IRR Proof | |||||||||||||||||||||||
| 0 | ($160,000) | ($100,000) | ($260,000) | $ (260,000) | $ (260,000) | ||||||||||||||||||||||||
| 1 | $99,975 | $99,975 | $ 90,886 | =+E47/((1+F$43)^A47) | $ 77,108 | ||||||||||||||||||||||||
| 2 | $99,975 | $99,975 | $ 82,624 | $ 59,471 | |||||||||||||||||||||||||
| Relining Eqpmnt 3 | ($30,000) | $99,975 | $69,975 | $ 52,573 | $ 32,104 | ||||||||||||||||||||||||
| 4 | $99,975 | $99,975 | $ 68,284 | $ 35,377 | |||||||||||||||||||||||||
| W/C recapture- sales used Eqpmnt 5 | $5,000 | $100,000 | $99,975 | $204,975 | $ 127,273 | $ 161,641 | $ 55,941 | ||||||||||||||||||||||
| $ 0 | |||||||||||||||||||||||||||||
| NPV | $ 161,641 | +E46+NPV(F43,E47:E51) | Sum | ||||||||||||||||||||||||||
| Excel Function | IRR | 29.7% | +IRR(E46:E51,0.1) | ||||||||||||||||||||||||||
| 29.7% | |||||||||||||||||||||||||||||
| DENNY | |||||||||||||||||||||||||||||
| Excel 4 | |||||||||||||||||||||||||||||
| Project Life: | 4 | years | |||||||||||||||||||||||||||
| Eqpmnt cost | $ 250,000 | $ (270,000) | $ (270,000) | ||||||||||||||||||||||||||
| Upgrade Capital | $ 90,000 | end 2 yrs. | Profitability | $ 120,000 | 101141.363626805 | ||||||||||||||||||||||||
| Salvage AT | $ 10,000 | 16,667 | Before tax @ 40% | index | $ 30,000 | 21311.6154922698 | Back to PPT 21 | ||||||||||||||||||||||
| Working Capital | $ 20,000 | $ 270,000 | $ 120,000 | 71849.5283992767 | Back to PPT 21 | ||||||||||||||||||||||||
| Cash flow | $ 120,000 | per year assumed AT | $ 28,156 | $ 150,000 | 75697.4924817257 | Back to PPT 21 | |||||||||||||||||||||||
| Hurdle Rate | 14% | Min.acceptable rate=Discount Rate | one-stream | 10.4% | $ 0 | Back to PPT 21 | |||||||||||||||||||||||
| Nominal $s | Back to PPT 21 | ||||||||||||||||||||||||||||
| Cash flow per year | Inflow | Working | Net | NPV | at IRR | Back to PPT 21 | |||||||||||||||||||||||
| Period | Outflow | Annual | Salvage | Capital | Cash Flow | BY hand | 18.6% | Back to PPT 21 | |||||||||||||||||||||
| 0 | $ (250,000) | $ (20,000) | $ (270,000) | $ (270,000) | $ (270,000) | (270,000) | Back to PPT 21 | ||||||||||||||||||||||
| 1 | $ 120,000 | $ 120,000 | 105,263 | 101,141 | 120,000 | =+K75/(1+$B$70)^A75 | Back to PPT 21 | ||||||||||||||||||||||
| 2 | $ (90,000) | $ 120,000 | $ 30,000 | 23,084 | 21,312 | 30,000 | =+K76/(1+$B$70)^A76 | Back to PPT 21 | |||||||||||||||||||||
| 3 | $ 120,000 | $ 120,000 | 80,997 | 71,850 | 120,000 | =+K77/(1+$B$70)^A77 | Back to PPT 21 | ||||||||||||||||||||||
| 4 | $ 120,000 | $ 10,000 | $ 20,000 | $ 150,000 | 88,812 | $ 28,156 | 75,697 | 150,000 | =+K78/(1+$B$70)^A78 | Back to PPT 21 | |||||||||||||||||||
| sum | $ 0 | Back to PPT 21 | |||||||||||||||||||||||||||
| NPV @ Hurdle Rate | $ 28,156 | 18.6% | $ 150,000 | $ 28,156 | Check IRR | Back to PPT 21 | |||||||||||||||||||||||
| IRR | 18.6% | +IRR(F74:F78,0.16) | +F74+NPV(B70,F75:F78) | Back to PPT 21 | |||||||||||||||||||||||||
| Hurdle Rate | 14% | Min.acceptable rate | Excel IRR | @ IRR % | Excel 5 | ||||||||||||||||||||||||
| Year | by Hand | ||||||||||||||||||||||||||||
| 0 | ($104,320) | $ (104,320) | |||||||||||||||||||||||||||
| 1 | $20,000 | 17,544 | =+E86/(1+$E$96)^D86 | Proof | ;=+IRR(E85:E95,0.2) | ||||||||||||||||||||||||
| 2 | $20,000 | 15,389 | =+E87/(1+$E$96)^D87 | Proof | 14.0% | ||||||||||||||||||||||||
| 3 | $20,000 | 13,499 | =+E88/(1+$E$96)^D88 | Proof | |||||||||||||||||||||||||
| 4 | $20,000 | 11,841 | =+E89/(1+$E$96)^D89 | Proof | |||||||||||||||||||||||||
| 5 | $20,000 | 10,387 | =+E90/(1+$E$96)^D90 | Proof | |||||||||||||||||||||||||
| 6 | $20,000 | 9,111 | =+E91/(1+$E$96)^D91 | Proof | |||||||||||||||||||||||||
| 7 | $20,000 | 7,992 | =+E92/(1+$E$96)^D92 | Proof | |||||||||||||||||||||||||
| 8 | $20,000 | 7,011 | =+E93/(1+$E$96)^D93 | Proof | |||||||||||||||||||||||||
| 9 | $20,000 | 6,150 | =+E94/(1+$E$96)^D94 | Proof | TAX RATE 25% | ||||||||||||||||||||||||
| 14% | EXCEL "IRR" function | 10 | $20,000 | 5,395 | =+E95/(1+$E$96)^D95 | Proof | |||||||||||||||||||||||
| =+IRR(E85:E95,.22) | 14.0% | 0 | Verfied | ||||||||||||||||||||||||||
| 266666.666666667 | |||||||||||||||||||||||||||||
| Quick Check | Excel 6 | ||||||||||||||||||||||||||||
| Year | Proof by hand | ||||||||||||||||||||||||||||
| 0 | $ (79,310) | ($79,310) | |||||||||||||||||||||||||||
| 1 | $ 22,000 | $19,643 | |||||||||||||||||||||||||||
| 2 | $ 22,000 | $17,539 | |||||||||||||||||||||||||||
| 3 | $ 22,000 | $15,660 | |||||||||||||||||||||||||||
| 4 | $ 22,000 | $13,983 | |||||||||||||||||||||||||||
| 5 | $ 22,000 | $12,485 | |||||||||||||||||||||||||||
| IRR | 12.0% | $0 | Check IRR | ||||||||||||||||||||||||||
| +IRR(F100:F105,0.15) | |||||||||||||||||||||||||||||
| 12% | |||||||||||||||||||||||||||||
| CAR | |||||||||||||||||||||||||||||
| WASH | |||||||||||||||||||||||||||||
| Excel 7 | IRR problem | ||||||||||||||||||||||||||||
| NOT NPV problem | |||||||||||||||||||||||||||||
| A | !0% not used | ||||||||||||||||||||||||||||
| (300,000) | New | Investment | (300,000) | ||||||||||||||||||||||||||
| (175,000) | OLD | Investment | 40,000 | ||||||||||||||||||||||||||
| (125,000) | Difference | (260,000) | |||||||||||||||||||||||||||
| B | 40,000 | OLD | sale of Old | Net invest | |||||||||||||||||||||||||
| (85,000) | NET difference | for New | |||||||||||||||||||||||||||
| C | |||||||||||||||||||||||||||||
| Total Cost Approach | Incemental Only | ||||||||||||||||||||||||||||
| Discount Rate | 10% | OLD | NEW | New - Old | |||||||||||||||||||||||||
| Term/years | 10 | 10 | ∆ Cash flow | ∆ Cash flow | |||||||||||||||||||||||||
| Year | 0 | (175,000) | (260,000) | -$300K+$40K | (85,000) | (85,000) | |||||||||||||||||||||||
| OLD | 1 | 45,000 | 60,000 | 15,000 | 13,636 | =+H129/(1+B$126)^B129 | |||||||||||||||||||||||
| Profitability | 2 | 45,000 | 60,000 | Same | 15,000 | 12,397 | =+H130/(1+B$126)^B130 | ||||||||||||||||||||||
| index | 3 | 45,000 | 60,000 | 60,000 | ◄Answer► | 15,000 | 11,270 | =+H131/(1+B$126)^B131 | |||||||||||||||||||||
| $175,000 | 4 | 45,000 | 60,000 | (50,000) | 15,000 | 10,245 | =+H132/(1+B$126)^B132 | ||||||||||||||||||||||
| $56,348 | 5 | 45,000 | 60,000 | 10,000 | 15,000 | 9,314 | =+H133/(1+B$126)^B133 | ||||||||||||||||||||||
| 32.2% | 6 | (35,000) | 10,000 | replace brushes | 45,000 | 25,401 | =+H134/(1+B$126)^B134 | ||||||||||||||||||||||
| 7 | 45,000 | 60,000 | 45,000 | 15,000 | 7,697 | =+H135/(1+B$126)^B135 | |||||||||||||||||||||||
| NEW | 8 | 45,000 | 60,000 | (80,000) | 15,000 | 6,998 | =+H136/(1+B$126)^B136 | $56,347.61 | |||||||||||||||||||||
| Profitability | 9 | 45,000 | 60,000 | (35,000) | 15,000 | 6,361 | =+H137/(1+B$126)^B137 | ||||||||||||||||||||||
| index | 10 | 45,000 | 67,000 | +$60k + $7k | 22,000 | 8,482 | =+H138/(1+B$126)^B138 | 83,149.133 | |||||||||||||||||||||
| $260,000 | =+IRR(C128:C138,0.15) | 17.6% | 17.2% | Greater NPV | 16.4% | ||||||||||||||||||||||||
| $83,149 | =+NPV(0.1,C129:C138)+C128 | $56,348 | $83,149 | $26,802 | NPV @ 10% | $26,802 | $ 26,802 | ||||||||||||||||||||||
| 32.0% | Profitability Index =-C140/C128 | 32.2% | 32.0% | NPV/Initial investment | |||||||||||||||||||||||||
| +56348/175000 | +83149/260000 | NEW=More NPV $s @ rate > disc. Rate | 56,348 | =+C128+NPV(B126,C129:C138) | |||||||||||||||||||||||||
| Go to Slide # 41 | |||||||||||||||||||||||||||||
| Quick Check | |||||||||||||||||||||||||||||
| Excel 8 | |||||||||||||||||||||||||||||
| s | |||||||||||||||||||||||||||||
| Incremental | |||||||||||||||||||||||||||||
| Nominal | Discounted | ||||||||||||||||||||||||||||
| A - B | By Hand | ||||||||||||||||||||||||||||
| Rate | 14% | A | B | ∆ | ∆ NPV | ∆ | |||||||||||||||||||||||
| 0 | ($80,000) | ($60,000) | ($20,000) | ($20,000) | ($20,000) | =+F158/(1+$B$157)^B158 | |||||||||||||||||||||||
| 1 | $20,000 | $16,000 | $4,000 | $4,000 | $3,509 | =+F159/(1+$B$157)^B159 | |||||||||||||||||||||||
| 2 | $20,000 | $16,000 | $4,000 | $4,000 | $3,078 | =+F160/(1+$B$157)^B160 | |||||||||||||||||||||||
| 3 | $20,000 | $16,000 | $4,000 | $4,000 | $2,700 | =+F161/(1+$B$157)^B161 | |||||||||||||||||||||||
| Answer = "b." | 4 | $20,000 | $16,000 | $4,000 | $4,000 | $2,368 | =+F162/(1+$B$157)^B162 | 13.4% | |||||||||||||||||||||
| 5 | $30,000 | $24,000 | $6,000 | $6,000 | $3,116 | =+F163/(1+$B$157)^B163 | |||||||||||||||||||||||
| IRR | 10.9% | 13.4% | ($5,229) | ||||||||||||||||||||||||||
| 13.4% | NPV | ($6,145) | ($916) | ($5,229) | $ 2,000 | $ (5,229) | |||||||||||||||||||||||
| Profitability Index | -7.7% | -1.5% | NPV/Initial investment | =+E158+NPV(B157,E159:E163) | |||||||||||||||||||||||||
| Furniture | |||||||||||||||||||||||||||||
| Excel 9 | |||||||||||||||||||||||||||||
| -21000+9000 | |||||||||||||||||||||||||||||
| Incremental | |||||||||||||||||||||||||||||
| Rate | BETTER | Old | New | ∆ NPV | |||||||||||||||||||||||||
| 10% | Old | New | ∆ | PV/year | PV/year | PV/year | |||||||||||||||||||||||
| 0 | ($4,500) | ($12,000) | $7,500 | ($4,500) | ($12,000) | $7,500 | =+D183/((1+$A$182)^$A183) | ||||||||||||||||||||||
| 1 | ($10,000) | ($6,000) | ($4,000) | ($9,091) | ($5,455) | ($3,636) | =+D184/((1+$A$182)^$A184) | ||||||||||||||||||||||
| 2 | ($10,000) | ($6,000) | ($4,000) | ($8,264) | ($4,959) | ($3,306) | =+D185/((1+$A$182)^$A185) | ||||||||||||||||||||||
| 3 | ($10,000) | ($6,000) | ($4,000) | ($7,513) | ($4,508) | ($3,005) | =+D186/((1+$A$182)^$A186) | ||||||||||||||||||||||
| 4 | ($10,000) | ($6,000) | ($4,000) | ($6,830) | ($4,098) | ($2,732) | =+D187/((1+$A$182)^$A187) | ||||||||||||||||||||||
| 5 | ($9,750) | ($3,000) | ($6,750) | ($6,054) | ($1,863) | ($4,191) | =+D188/((1+$A$182)^$A188) | ||||||||||||||||||||||
| NPV function excel | less cost | discounted by year | |||||||||||||||||||||||||||
| NPV | ($42,253) | ($32,882) | ($9,371) | $ (42,253) | $ (32,882) | $ (9,371) | |||||||||||||||||||||||
| Go to Slide # 45 | |||||||||||||||||||||||||||||
| BAY | |||||||||||||||||||||||||||||
| Excel 10 | |||||||||||||||||||||||||||||
| Rate | 14% | $34,320 | $ (100,000) | ||||||||||||||||||||||||||
| Needed return | $34,320 | 14% | |||||||||||||||||||||||||||
| +PMT(F197,A207,D203) | 4 | ||||||||||||||||||||||||||||
| +pmt(rate, nper,pv] | $34,320 | ($34,320.48) | |||||||||||||||||||||||||||
| rate = 14%, Nper=4, pv = ($100K) | PMT function | ||||||||||||||||||||||||||||
| answer = "c." | |||||||||||||||||||||||||||||
| PV$ | PV$ | ||||||||||||||||||||||||||||
| Year | Tangible | Intangible | Total | PV$ | Tangible | Intangible | Proof | ||||||||||||||||||||||
| 0 | $ (100,000) | $ - 0 | $ (100,000) | Nominal | $ (100,000) | at 14% | at 14% | $34,320.48 | =+NPV(G216,L205:L224) | ||||||||||||||||||||
| 1 | $ 10,000 | 24,320.48 | $34,320 | Needed return | $ 30,106 | $ 8,772 | $ 21,334 | $1,040,000.00 | $s | ||||||||||||||||||||
| 2 | $ 10,000 | 24,320.48 | $ 34,320 | Needed return | $ 26,408 | $ 7,695 | $ 18,714 | 1 | 0 | ||||||||||||||||||||
| 3 | $ 10,000 | 24,320.48 | $ 34,320 | Needed return | $ 23,165 | $ 6,750 | $ 16,416 | 2 | 0 | ||||||||||||||||||||
| 4 | $ 10,000 | 24,320.48 | $ 34,320 | Needed return | $ 20,320 | $ 5,921 | $ 14,400 | 3 | 0 | ||||||||||||||||||||
| Proof | $ (60,000) | $ 97,282 | 14.0% | IRR | $ 100,000 | $ 29,137 | $ 70,863 | 4 | 0 | ||||||||||||||||||||
| $0.00 | NPV | 5 | 0 | ||||||||||||||||||||||||||
| 6 | 0 | ||||||||||||||||||||||||||||
| Need | TANKER | Excel 11 | 7 | 0 | |||||||||||||||||||||||||
| Salvage | 8 | 0 | |||||||||||||||||||||||||||
| to be | Pv of project End salvage value = $1040,000 | 9 | 0 | ||||||||||||||||||||||||||
| $1,040,000 | Negative PV without salvage | $ 1,040,000 | 10 | 0 | 1,040,000 | ||||||||||||||||||||||||
| to meet | 20 | Years | 11 | 0 | 20 | ||||||||||||||||||||||||
| 12% | 12% | hurdle rate | 12 | 0 | 12.0% | ||||||||||||||||||||||||
| requied | PV x (1 + rate)^years | $ 10,032,145 | 1.12 to the 20th power | x shortage | 13 | 0 | 10,032,145 | ||||||||||||||||||||||
| Hurdle Rate | Future value of | $ 1,040,000 | after 20 years | 14 | 0 | ||||||||||||||||||||||||
| What future vale has a PV of | $1,040,000 | +G214*(1+G216)^G215 | 15 | 0 | |||||||||||||||||||||||||
| 16 | 0 | ||||||||||||||||||||||||||||
| Excel 12 | Daily Grind | Discounted | 14% | 17 | 0 | ||||||||||||||||||||||||
| Cash flows | ∑ Non-Disc.cash flow | Discounted cash flow | ∑ discounted cash flow | Discount rate 14% | 18 | 0 | |||||||||||||||||||||||
| 0 | $ (140,000) | $ - 0 | $ (140,000) | $ - 0 | 19 | 0 | |||||||||||||||||||||||
| 1 | $ 35,000 | $ (105,000) | $ 30,702 | $ (109,298) | 20 | $ 10,032,145 | |||||||||||||||||||||||
| 2 | $ 35,000 | $ (70,000) | $ 26,931 | $ (82,367) | |||||||||||||||||||||||||
| 3 | $ 35,000 | $ (35,000) | $ 23,624 | $ (58,743) | |||||||||||||||||||||||||
| 4 | $ 35,000 | $ - 0 | $ 20,723 | $ (38,020) | $ - 0 | ||||||||||||||||||||||||
| 5 | $ 35,000 | $ 35,000 | $ 18,178 | $ (19,842) | $ 35,000 | ||||||||||||||||||||||||
| 6 | $ 35,000 | $ 70,000 | $ 15,946 | $ (3,897) | |||||||||||||||||||||||||
| 7 | $ 35,000 | $ 105,000 | $ 13,987 | $ 10,091 | ($3,897) | ||||||||||||||||||||||||
| 8 | $ 35,000 | $ 140,000 | $ 12,270 | $ 22,360 | $13,987 | ||||||||||||||||||||||||
| 9 | $ 35,000 | $ 175,000 | $ 10,763 | $ 33,123 | 0.28 | ||||||||||||||||||||||||
| 10 | $ 35,000 | $ 210,000 | $ 9,441 | $ 42,564 | |||||||||||||||||||||||||
| 4.00 | Years | 6.28 | |||||||||||||||||||||||||||
| Excel 13 | Discounted | ||||||||||||||||||||||||||||
| Period | Given Data Cash flows | ∑ non-Disc.cash flow | Discounted cash flow | ∑ discounted cash flow | |||||||||||||||||||||||||
| 0 | ($4,000) | $0 | ($4,000) | $0 | |||||||||||||||||||||||||
| 1 | $1,000 | ($3,000) | $877 | ($3,123) | |||||||||||||||||||||||||
| 2 | $0 | ($3,000) | $0 | ($3,123) | |||||||||||||||||||||||||
| 3 | $2,200 | ($800) | $1,485 | ($1,638) | ($572) | ||||||||||||||||||||||||
| 4 | $1,800 | $1,000 | $1,066 | ($572) | $779 | ||||||||||||||||||||||||
| 5 | $1,500 | $2,500 | $779 | $207 | 0.73 | ||||||||||||||||||||||||
| 3.44 | Years | 4.73 | |||||||||||||||||||||||||||
| ($800) | Non-discounted | Discounted | |||||||||||||||||||||||||||
| $1,800 | aka nominal $ | +PV(rate, nper, amt) | |||||||||||||||||||||||||||
| (0.44) | =+PV(14%,5,100) | ||||||||||||||||||||||||||||
| ($343.31) | |||||||||||||||||||||||||||||
| Discount rate 14% | |||||||||||||||||||||||||||||
| Excel 14 | Tax rate | 40.0% | since we buy with AT $, savings & income must be AT | ||||||||||||||||||||||||||
| Tax effect of depreciation not considered | |||||||||||||||||||||||||||||
| Discount Rate | 14.0% | ||||||||||||||||||||||||||||
| Project Life | 10 Years | ||||||||||||||||||||||||||||
| Units produced | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |||||||||||||||||||
| 15,000 | 19,000 | 23,000 | 27,000 | 31,000 | 35,000 | 39,000 | 43,000 | 47,000 | 28,000 | ||||||||||||||||||||
| Alternative 1 | |||||||||||||||||||||||||||||
| Buy a smaller second machine to the one already in use | |||||||||||||||||||||||||||||
| two machines | 180,000 | cost second new machine | |||||||||||||||||||||||||||
| 200,000 | replacement current old machine in 5 yrs. | ||||||||||||||||||||||||||||
| 1,800 | maintenance cost = $3000 each machine per year | 9 | yrs | ||||||||||||||||||||||||||
| 100,000 | after 5 years, second machine residual value | 100 | |||||||||||||||||||||||||||
| 15,000 | residual value of existing old machine when 2nd machine purchase in 5 yrs. | 8% | |||||||||||||||||||||||||||
| 199.90 | |||||||||||||||||||||||||||||
| Alternative 2 | BIG better machine | ||||||||||||||||||||||||||||
| buy big more efficient model | 375,000 | Cost big machine | |||||||||||||||||||||||||||
| sell existing used machine | 35,000 | ||||||||||||||||||||||||||||
| maintained per year | 13,000 | ||||||||||||||||||||||||||||
| Savings per unit with better machine | $ 1.39 | ||||||||||||||||||||||||||||
| residual of new machine | 50,000 | after 10 years | |||||||||||||||||||||||||||
| Units | 15,000 | 19,000 | 23,000 | 27,000 | 31,000 | 35,000 | 39,000 | 43,000 | 47,000 | 28,000 | |||||||||||||||||||
| Discount rate | 14.0% | ||||||||||||||||||||||||||||
| Period:► | initial [0] | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||
| Alternative 1 | |||||||||||||||||||||||||||||
| second machine | (180,000) | ||||||||||||||||||||||||||||
| replace first machine | (200,000) | ||||||||||||||||||||||||||||
| Residual value | 15,000 | 100,000 | |||||||||||||||||||||||||||
| maintenance | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | |||||||||||||||||||
| net nominal cash flow | (180,000) | (2,160) | (2,160) | (2,160) | (2,160) | (2,160) | (187,160) | (2,160) | (2,160) | (2,160) | 97,840 | ||||||||||||||||||
| discounted each year | (180,000) | (1,895) | (1,662) | (1,458) | (1,279) | (1,122) | (85,268) | (863) | (757) | (664) | 26,392 | ||||||||||||||||||
| Sum of discounted cash flows + initial | (248,576) | ||||||||||||||||||||||||||||
| Formula | (248,576) | ||||||||||||||||||||||||||||
| Discount rate | 14.0% | ||||||||||||||||||||||||||||
| Period:► | initial [0] | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||
| Alternative 2 | |||||||||||||||||||||||||||||
| second machine | (375,000) | ||||||||||||||||||||||||||||
| sell existing machine | 35,000 | ||||||||||||||||||||||||||||
| residual of new machine | 50,000 | ||||||||||||||||||||||||||||
| Savings or less cost per unit | 12,510 | 15,846 | 19,182 | 22,518 | 25,854 | 29,190 | 32,526 | 35,862 | 39,198 | 23,352 | |||||||||||||||||||
| maintenance | (7,800) | (7,800) | (7,800) | (7,800) | (7,800) | (7,800) | (7,800) | (7,800) | (7,800) | (7,800) | |||||||||||||||||||
| net nominal cash flow | (340,000) | 4,710 | 8,046 | 11,382 | 14,718 | 18,054 | 21,390 | 24,726 | 28,062 | 31,398 | 65,552 | ||||||||||||||||||
| discounted each year | (340,000) | 4,132 | 6,191 | 7,683 | 8,714 | 9,377 | 9,745 | 9,881 | 9,837 | 9,655 | 17,682 | ||||||||||||||||||
| Sum of discounted cash flows + initial | (247,103) | ||||||||||||||||||||||||||||
| Formula | (247,103) | no difference | |||||||||||||||||||||||||||
| Change rate | |||||||||||||||||||||||||||||
| Excel 15 | |||||||||||||||||||||||||||||
| Inflation, FX, etc. not considered | |||||||||||||||||||||||||||||
| No consideration to tax effect of salvage | |||||||||||||||||||||||||||||
| would have to be considered - complicating calculations | |||||||||||||||||||||||||||||
| Discount rate | 12.0% | tax rate | 30% | ||||||||||||||||||||||||||
| Period:► | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||||||||
| Ref# | |||||||||||||||||||||||||||||
| Cost of equipment | (300,000) | 100,000 | A | ||||||||||||||||||||||||||
| Working Capital | (75,000) | 75,000 | B | ||||||||||||||||||||||||||
| Capitalized road maintenance | - 0 | - 0 | - 0 | - 0 | - 0 | (40,000) | C | ||||||||||||||||||||||
| Nominal each yaer | (375,000) | - 0 | - 0 | - 0 | - 0 | - 0 | (40,000) | - 0 | - 0 | - 0 | 175,000 | ||||||||||||||||||
| discounted each year | (375,000) | - 0 | - 0 | - 0 | - 0 | - 0 | (20,265) | - 0 | - 0 | - 0 | 56,345 | Sum 1 | |||||||||||||||||
| D | |||||||||||||||||||||||||||||
| Sales net of expense = pre tax income | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | E | ||||||||||||||||||
| SL tax exp. allowance for Depreciation | (30,000) | (30,000) | (30,000) | (30,000) | (30,000) | (38,000) | (38,000) | (38,000) | (38,000) | (38,000) | F | ||||||||||||||||||
| Pre-tax Income | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 92,000 | 92,000 | 92,000 | 92,000 | 92,000 | G | ||||||||||||||||||
| taxes paid | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 27,600 | 27,600 | 27,600 | 27,600 | 27,600 | H | ||||||||||||||||||
| Cash Income +E-((F-E)*tax rate) | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 102,400 | 102,400 | 102,400 | 102,400 | 119,600 | I | ||||||||||||||||||
| J | |||||||||||||||||||||||||||||
| net nominal Cash income cash flow | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 102,400 | 102,400 | 102,400 | 102,400 | 102,400 | K | ||||||||||||||||||
| discounted each year | 89,286 | 79,719 | 71,178 | 63,552 | 56,743 | 51,879 | 46,321 | 41,358 | 36,926 | 32,970 | Sum 2 | ||||||||||||||||||
| =+E338/(1+$C325)^E326 | |||||||||||||||||||||||||||||
| Sum 1 + Sum 2 | (375,000) | 89,286 | 79,719 | 71,178 | 63,552 | 56,743 | 31,614 | 46,321 | 41,358 | 36,926 | 89,315 | ||||||||||||||||||
| Sum of discounted cash flows + initial | 231,011 | Sum 1 + Sum 2 | By hand | ||||||||||||||||||||||||||
| Formula | 231,011 | =+C332+NPV(C325,D331:M331)+NPV(C325,D340:M340) | |||||||||||||||||||||||||||
| 3 | |||||||||||||||||||||||||||||
| 4 | Excerl 15 | ||||||||||||||||||||||||||||
| 5 | |||||||||||||||||||||||||||||
| X | Y | ||||||||||||||||||||||||||||
| 100000 | 100000 | ||||||||||||||||||||||||||||
| 8% | |||||||||||||||||||||||||||||
| X | Y | X | Y | sum | |||||||||||||||||||||||||
| 100000 | 100000 | (100,000) | |||||||||||||||||||||||||||
| 60000 | 60000 | 1 | 55,556 | 55556 | -44444 | ||||||||||||||||||||||||
| 40000 | 35000 | 2 | 34,294 | 30007 | -14438 | ||||||||||||||||||||||||
| 25000 | 3 | - 0 | 19846 | 5408 | -0.727488 | 3.73 | |||||||||||||||||||||||
| 25000 | 4 | - 0 | 18376 | 23784 | |||||||||||||||||||||||||
| 25000 | 5 | - 0 | 17015 | 40799 | |||||||||||||||||||||||||
| 25000 | 6 | - 0 | 15754 | 56553 | |||||||||||||||||||||||||
| 25000 | 7 | - 0 | 14587 | 71140 | |||||||||||||||||||||||||
| 25000 | 8 | - 0 | 13507 | 84647 | |||||||||||||||||||||||||
| 25000 | 9 | - 0 | 12506 | 97153 | |||||||||||||||||||||||||
| 25000 | 10 | - 0 | 11580 | 108733 | |||||||||||||||||||||||||
| 89,849 | 108,733 | ||||||||||||||||||||||||||||
| No pay back | |||||||||||||||||||||||||||||
| 12% | by hand | ||||||||||||||||||||||||||||
| 1 | 60,000 | 53,571.43 | |||||||||||||||||||||||||||
| 2 | 60,000 | 47,831.63 | =+PV(B355,A360,B356) | ||||||||||||||||||||||||||
| 3 | 60,000 | 42,706.81 | ERROR:#REF! | ||||||||||||||||||||||||||
| 4 | 60,000 | 38,131.08 | |||||||||||||||||||||||||||
| 5 | 60,000 | 34,045.61 | |||||||||||||||||||||||||||
| $ 216,287 | |||||||||||||||||||||||||||||
| 14% | by hand | ||||||||||||||||||||||||||||
| 0 | ($343.31) | Excel "PV" function | |||||||||||||||||||||||||||
| 1 | $100 | 87.72 | |||||||||||||||||||||||||||
| 2 | 100 | 76.95 | |||||||||||||||||||||||||||
| 3 | 100 | 67.50 | |||||||||||||||||||||||||||
| 4 | 100 | 59.21 | |||||||||||||||||||||||||||
| 5 | 100 | 51.94 | |||||||||||||||||||||||||||
| $ 343.31 | |||||||||||||||||||||||||||||
| P r o o f | |||||||||||||||||||||||||||||
| end period | Beginning | interest | Withdrawal | End | |||||||||||||||||||||||||
| 1 | $343.31 | $48.06 | ($100.00) | $291.37 | |||||||||||||||||||||||||
| 2 | $291.37 | $40.79 | ($100.00) | $232.16 | |||||||||||||||||||||||||
| 3 | $232.16 | $32.50 | ($100.00) | $164.67 | |||||||||||||||||||||||||
| 4 | $164.67 | $23.05 | ($100.00) | $87.72 | |||||||||||||||||||||||||
| 5 | $87.72 | $12.28 | ($100.00) | $0.00 | |||||||||||||||||||||||||
| DEFINITIONS | |||||||||||||||||||||||||||||
| 1 | Accounting Rate of Return | = Simple Rate of Return = Average return for periods being examined divided by Average investment for that period | |||||||||||||||||||||||||||
| 2 | Compound Interest | Interest earned on investment and on interest previously earned [ interest on interest] | |||||||||||||||||||||||||||
| 3 | Discount Rate | Rate used to Reduce [Discount[ Future Cash Flows; Can be WACC; WACC adjusted for Risk: Incremental cost or Cost specific to the Project | |||||||||||||||||||||||||||
| 4 | Discounted Cash Flow | = DCF= future cash flows reduced to Present Value Using a Discount Rate | |||||||||||||||||||||||||||
| 5 | Hurdle Rate | Discount /rate which includes factor for success ratio on projects; e.g. 70% success rate then increase WACC by 3/7 | |||||||||||||||||||||||||||
| 6 | Internal Rate of Return | =IRR= computed Rate applied to future cash flow such that the sum of initial investment and future cash flows = zero | |||||||||||||||||||||||||||
| 7 | Net Present Value | =NPV=Present value reduced by initial investment | |||||||||||||||||||||||||||
| 8 | Nominal Dollars | Non-discounted $s; spending/savings/returns without discounting | |||||||||||||||||||||||||||
| 9 | Payback Period | Using DCF or using nominal $then the period of time with discount $s that the future cash flows = initial investment. | |||||||||||||||||||||||||||
| 10 | Present Value | =PV=The current value of future Cash flows reducing by selected Discount Rate | |||||||||||||||||||||||||||
| 11 | Profitability Index | NPV divided by Initial Investment | |||||||||||||||||||||||||||
| 12 | Salvage Value | = Residual Value = RESALE =Amount expected to be resceived from sale/trade-in of intial capital investment item[s] | |||||||||||||||||||||||||||
| 13 | Weighted Average Cost of Capital | =WACC= Cost of Capital=Average of the Cost of Debt [Interest after tax and of Cost of Equity [usually through PE Ratio | |||||||||||||||||||||||||||
| 14 | Working Capital | Current Assets less Current liabilities | |||||||||||||||||||||||||||
| Simple Example | |||||||||||||||||||||||||||||
| $1,000 | Capital Expenditure | Residual = | 0 | ||||||||||||||||||||||||||
| 10% | Discount Rate= Hurdle Rate | ||||||||||||||||||||||||||||
| period | Returns | Rate | |||||||||||||||||||||||||||
| 0 | Nominal | DCF | |||||||||||||||||||||||||||
| 1 | $400 | $364 | $400/(1+discount Rate) to # of years power=$400/(1+10%)^1 | ||||||||||||||||||||||||||
| 2 | $450 | $372 | $450/(1+discount Rate) to # of years power=$450/(1+10%)^2 | ||||||||||||||||||||||||||
| 3 | $500 | $376 | $500/(1+discount Rate) to # of years power=$500/(1+10%)^3 | ||||||||||||||||||||||||||
| $1,350 | $1,111 | ||||||||||||||||||||||||||||
| $1,111 | $111.19 | ||||||||||||||||||||||||||||
| PV Future CF--DCF | $1,111 | ($1,000) | |||||||||||||||||||||||||||
| NPV--DCF | $111 | $111 | |||||||||||||||||||||||||||
| $1,000 | Average investment | ||||||||||||||||||||||||||||
| $450 | Average nominal $ Return | ||||||||||||||||||||||||||||
| Accounting Rate of Return | 45.0% | ||||||||||||||||||||||||||||
| $111 | NPV | ||||||||||||||||||||||||||||
| Profitability Index | 11.1% | $1,000 | Initial Investment | ||||||||||||||||||||||||||
| 1 | 2 | 3 | ◄Year | ||||||||||||||||||||||||||
| Payback Period | Years | $400 | $450 | $500 | |||||||||||||||||||||||||
| Nominal $s | 2.30 | $400 | $450 | $150 | $1,000 | ||||||||||||||||||||||||
| $364 | $372 | $376 | |||||||||||||||||||||||||||
| DCF | 2.70 | $364 | $372 | $264 | $1,000 | ||||||||||||||||||||||||
| Capital Expenditure | ($1,000) | DCF at | |||||||||||||||||||||||||||
| IRR | Year | Nom.Return | 16.0% | Discounted | |||||||||||||||||||||||||
| 1 | $400 | $344.90 | at | ||||||||||||||||||||||||||
| 2 | $450 | $334.57 | IRR | ||||||||||||||||||||||||||
| 3 | $500 | $320.53 | = | ||||||||||||||||||||||||||
| IRR | 16.0% | $1,000.00 | Initial | ||||||||||||||||||||||||||
| Proof | Investment | ||||||||||||||||||||||||||||
| 16% | |||||||||||||||||||||||||||||
HCT---&P of &N---&D,&T---&F,&A
•Decker Company can purchase a new machine at a cost of $104,320 that will save $26667 per year in cash operating costs. = $20000 AFTER TAX •The machine has a 10-year life.
How large would the salvage value need to be ?
Should Holland open a mine on the property?
Consider the following two investments: Project X Project Y Initial investment $100,000 $100,000 Year 1 cash inflow $60,000 $60,000 Year 2 cash inflow $40,000 $35,000 Year 3-10 cash inflows $0 $25,000 Which project has the shortest payback period? a. Project X b. Project Y c. Cannot be determined Discount rate = 8%
•Decker Company can purchase a new machine at a cost of $104,320 that will save $20,000 per year in cash operating costs. •The machine has a 10-year life.
taxes
after taxes
Proof
$22000 AFTER TAX
CASH INFLOW AFTER TAX
CASH INFLOW AFTER TAX
OP.COST AFTER TAX
@10%
@10%
Both have DCF > Discount rate
Equal Cash Flows in Susequent Periods
Unequal Cash Flows in Susequent Periods
C-14 Cash Flow
| Debits make cash go DOWN in Cash Flow | |||||||||||||||||||||||||||
| Credits make cash go UP | |||||||||||||||||||||||||||
| Account category | Normal Balance | Operating | Investing | Financing | |||||||||||||||||||||||
| Current Asset | Debit | X | |||||||||||||||||||||||||
| Current Asset-Contra | Credit | X | |||||||||||||||||||||||||
| Non-current Asset | Debit | X | |||||||||||||||||||||||||
| Non-current Asset-Contra | Credit | X | |||||||||||||||||||||||||
| Current Liability | Credit | X | |||||||||||||||||||||||||
| Current Liability-Contra | Debit | X | |||||||||||||||||||||||||
| Non-Current Liability | Credit | X | |||||||||||||||||||||||||
| Non-Current Liability-Contra | Debit | X | |||||||||||||||||||||||||
| Equity | Credit | X | |||||||||||||||||||||||||
| Equity-Contra | Debit | X | |||||||||||||||||||||||||
| Income Statement Accounts: Revenue/Income | Credit | X | |||||||||||||||||||||||||
| Income Statement Accounts: Expense/Losses | Debit | X | |||||||||||||||||||||||||
| Other Expense / Loss on sale of Non-current assets | Debit | X | |||||||||||||||||||||||||
| Other income /Gain on sale of Non-current assets | Credit | X | |||||||||||||||||||||||||
| Accumulated Amortization [Amortization Expense] | Credit | X | Add back to net income - Cash UP | ||||||||||||||||||||||||
| Accumulated Depreciation [Depreciation Expense] | Credit | X | Add back to net income - Cash UP | ||||||||||||||||||||||||
| Contra's act opposite from that to which they are contra | |||||||||||||||||||||||||||
| Taxes are operating whether deferred tax assets or deferred tax liabilities whether current or non-current | Dr./Cr, | ||||||||||||||||||||||||||
| #1 | Repaid long term debt of : | $ 600,000 | #2 | Purchase of PPE = | $ 125,000 | Data given | Equity Example | Effect | |||||||||||||||||||
| Sale of PPE:NBV = $12000, Cost $24000, sold $14000) | Purchase of Intangibles = | $ 95,000 | Data given | Cost | $ 85,000 | Dr/Cr Balance | 2xx2 | 2xx1 | Change | on Cash | Ref | ||||||||||||||||
| Other comprehensive income in equity increased by $12000, offset in Other current assets | $ 12,000 | Sales of PPE = | $ 43,000 | Gain = | $ 6,000 | Data given | AD | $ 48,000 | Common stock Par Value F | C | $450,000 | $320,000 | $130,000 | $130,000 | W | ||||||||||||
| Used Treasury Stock of $50,000 to buy PPE | $ 50,000 | Cost = | $ 85,000 | Data given | BV | $ 37,000 | Additional Paid-in-Capital F | C | $9,670,000 | $7,200,000 | $2,470,000 | $2,470,000 | X | ||||||||||||||
| Sold common stock of | $ 125,000 | New Debt = | $ 470,000 | Sale | $ 43,000 | Treasury Stock F | D | ($1,054,000) | $0 | ($1,054,000) | ($1,054,000) | Y | |||||||||||||||
| Paid dividend of | $ 23,000 | No Dividends | Retained Earnings | C | $3,200,000 | $2,900,000 | $300,000 | $300,000 | Z | ||||||||||||||||||
| Total Equity | C | $12,266,000 | $10,420,000 | $1,846,000 | $1,846,000 | ||||||||||||||||||||||
| Affect on | Class Company, Inc. | ||||||||||||||||||||||||||
| Class Company, Inc. | Category | Cash | Balance Sheet as of | Cash up | W | Issued/Sold Common Stock 130000 shares $1 par for $20 | |||||||||||||||||||||
| Balance Sheet as of | Increase | Increase | 12/31/11 | 12/31/12 | Cash | Cash up | X | Issued/Sold Common Stock 130000 shares $1 par for $20 | |||||||||||||||||||
| Assets: | 12/31/11 | 12/31/12 | (Decrease) | (Decrease) | Assets: | Increase | Increase | Cash Down | Y | Bought Back 62000 shares common stock for $17 | |||||||||||||||||
| Current Assets: | $s | $s | Current Assets: | $s | $s | (Decrease) | (Decrease) | Cash down for dividends | Z | Had NI of $700,000 -O-and Issued Dividends of $400,000 -F-; NI [Net Income] in Operating Section of CF | |||||||||||||||||
| Cash | 150,000 | 340,000 | 190,000 | (190,000) | Cash | 200,000 | 952,110 | 752,110 | 752,110 | ||||||||||||||||||
| Accounts Receivable | 355,000 | 418,000 | 63,000 | (63,000) | Accounts Receivable | 385,100 | 438,000 | 52,900 | (52,900) | ||||||||||||||||||
| Prepaid Expenses | 27,000 | 19,000 | (8,000) | 8,000 | Prepaid Expenses | 33,000 | 29,000 | (4,000) | 4,000 | ||||||||||||||||||
| Other Current Assets | 15,000 | 11,000 | (4,000) | 4,000 | Other Current Assets | 22,000 | 7,000 | (15,000) | 15,000 | ||||||||||||||||||
| Total Current Assets: | 547,000 | 788,000 | 241,000 | (241,000) | Total Current Assets: | 640,100 | 1,426,110 | ||||||||||||||||||||
| Plant Property & Equipment | 954,000 | 1,127,000 | 173,000 | (173,000) | Plant Property & Equipment | 2,700,000 | 2,740,000 | 40,000 | (40,000) | ||||||||||||||||||
| Cr. | Accumulated Depreciation | 332,000 | 445,000 | 113,000 | 113,000 | P&L item | Cr. Balance | Accumulated Depreciation | (600,000) | (760,000) | (160,000) | 160,000 | P&L item | ||||||||||||||
| Net Plant Property & Equipment | 622,000 | 682,000 | 60,000 | (60,000) | Net Plant Property & Equipment | 2,100,000 | 1,980,000 | ||||||||||||||||||||
| Other Non-Current Assets: | Other Non-Current Assets: | ||||||||||||||||||||||||||
| Intangibles | 375,000 | 350,000 | (25,000) | 25,000 | P&L item | Intangibles | 500,000 | 480,000 | (20,000) | 20,000 | P&L item | ||||||||||||||||
| Deferred Loan Placement Costs | 25,000 | 25,000 | 0 | 0 | P&L item | Deferred Loan Placement Costs | 30,000 | 30,000 | 0 | 0 | P&L item | ||||||||||||||||
| Other Non-Current assets | 15,000 | 14,000 | (1,000) | 1,000 | Other Non-Current assets | 41,000 | 37,000 | (4,000) | 4,000 | ||||||||||||||||||
| Total Other Non-Current Assets | 415,000 | 389,000 | (26,000) | 26,000 | Total Other Non-Current Assets | 571,000 | 547,000 | ||||||||||||||||||||
| Total Assets | 1,584,000 | 1,859,000 | 275,000 | (275,000) | Total Assets | 3,311,100 | 3,953,110 | ||||||||||||||||||||
| Liabilities: | Liabilities: | ||||||||||||||||||||||||||
| Current Liabilities | Current Portion of Long Term Debt | 260,000 | 290,000 | 30,000 | 30,000 | ||||||||||||||||||||||
| Accounts Payable | 129,000 | 139,000 | 10,000 | 10,000 | Accounts Payable | 720,000 | 760,000 | 40,000 | 40,000 | ||||||||||||||||||
| Accrued Expenses | 51,000 | 64,000 | 13,000 | 13,000 | Accrued Expenses | 50,000 | 40,000 | (10,000) | (10,000) | ||||||||||||||||||
| Current Portion of LT debt | 31,000 | 63,000 | 32,000 | 32,000 | Other Current Liabilities | 23,000 | 11,000 | (12,000) | (12,000) | ||||||||||||||||||
| Other Current Liabilities | 23,000 | 11,000 | (12,000) | (12,000) | Total Current Liabilities | 1,053,000 | 1,101,000 | ||||||||||||||||||||
| Total Current Liabilities | 234,000 | 277,000 | 43,000 | 43,000 | |||||||||||||||||||||||
| Non-Current Liabilities | |||||||||||||||||||||||||||
| Non-Current Liabilities | Long Term Debt | 1,100,000 | 915,000 | (185,000) | (185,000) | ||||||||||||||||||||||
| Long Term Debt | 1,100,000 | 915,000 | (185,000) | (185,000) | Deferred Income Taxes | 55,000 | 71,000 | 16,000 | 16,000 | ||||||||||||||||||
| Deferred Income Taxes | 83,000 | 99,000 | 16,000 | 16,000 | P&L item | Other Non-current Liabilities | 3,000 | 5,000 | 2,000 | 2,000 | P&L item | ||||||||||||||||
| Other Non-current Liabilities | 14,000 | 12,000 | (2,000) | (2,000) | Total Non-Current Liabilities | 1,158,000 | 991,000 | ||||||||||||||||||||
| Total Non-Current Liabilities | 1,197,000 | 1,026,000 | (171,000) | (171,000) | |||||||||||||||||||||||
| Total Liabilities | 2,211,000 | 2,092,000 | |||||||||||||||||||||||||
| Total Liabilities | 1,431,000 | 1,303,000 | (128,000) | (128,000) | |||||||||||||||||||||||
| Owners Equity | |||||||||||||||||||||||||||
| Owners Equity | Common Stock @ par = $0.01 | 100 | 110 | 10 | 10 | ||||||||||||||||||||||
| Common Stock @ par = $0.01 | 100 | 225 | 125 | 125 | Additional Paid-in Capital | 700,000 | 805,000 | 105,000 | 105,000 | ||||||||||||||||||
| Additional Paid-in Capital | 99,900 | 224,775 | 124,875 | 124,875 | Retained Earnings | 400,000 | 1,056,000 | 656,000 | 656,000 | ||||||||||||||||||
| Treasury Stock | 65,000 | 15,000 | (50,000) | 50,000 | Total Owners' Equity | 1,100,100 | 1,861,110 | ||||||||||||||||||||
| Dividends paid [before closing entries] | 0 | 23,000 | 23,000 | (23,000) | |||||||||||||||||||||||
| Other comprehensive income | 0 | $ 12,000 | 12,000 | 12,000 | Total Liabilities and Owners Equity | 3,311,100 | 3,953,110 | ||||||||||||||||||||
| Retained Earnings | 118,000 | 357,000 | 239,000 | 239,000 | Before | ||||||||||||||||||||||
| Total Owners' Equity | 153,000 | 556,000 | 403,000 | 403,000 | Dividends | ||||||||||||||||||||||
| acct. | 0 | 0 | |||||||||||||||||||||||||
| Total Liabilities and Owners Equity | 1,584,000 | 1,859,000 | 275,000 | 275,000 | closed @ YE | ||||||||||||||||||||||
| Note: in this example we have Intangibles - which is also a non-cash charge to income | |||||||||||||||||||||||||||
| 0 | 0 | like depreciation - so we add that back to net income just like deprecation: | |||||||||||||||||||||||||
| Note: in this example we have Intngibles - which is also a non-cash charge to income | |||||||||||||||||||||||||||
| like depreciation - so we add that back to net income just like deprecation: | Class Company, Inc. | ||||||||||||||||||||||||||
| Statement of Income | |||||||||||||||||||||||||||
| Period Ending 12/31/2012 | |||||||||||||||||||||||||||
| Class Company, Inc. | $s | $s | |||||||||||||||||||||||||
| Statement of Income | Revenue | 7,000,000 | 100.0% | ||||||||||||||||||||||||
| Period Ending 12/31/2012 | |||||||||||||||||||||||||||
| $s | $s | Cost of Goods Sold | 4,500,000 | 64.3% | |||||||||||||||||||||||
| Revenue | 3,600,000 | 100.0% | |||||||||||||||||||||||||
| Gross Profit | 2,500,000 | 35.7% | |||||||||||||||||||||||||
| Cost of Goods Sold | 2,113,000 | 58.7% | |||||||||||||||||||||||||
| Operating Expenses: | 1,500,000 | 21.4% | |||||||||||||||||||||||||
| Gross Profit | 1,487,000 | 41.3% | Operating Income | 1,000,000 | 14.3% | ||||||||||||||||||||||
| Operating Expenses: | Other Income/Gain | 6,000 | 0.1% | ||||||||||||||||||||||||
| Wage Expense | 721,000 | 20.0% | |||||||||||||||||||||||||
| Advertising & Marketing Expense | 78,000 | 2.2% | Provision for Income Taxes | 505,000 | 7.2% | ||||||||||||||||||||||
| Vehicle Expenses | 22,000 | 0.6% | |||||||||||||||||||||||||
| Insurance and Other | 48,000 | 1.3% | Operating Income | 1,000,000 | 14.3% | ||||||||||||||||||||||
| Depreciation | 125,000 | 3.5% | |||||||||||||||||||||||||
| Write-off of Goodwill | 25,000 | 0.7% | Other Income | 6,000 | 0.1% | ||||||||||||||||||||||
| Total Operating Expenses | 1,019,000 | 28.3% | Taxes | 350,000 | 5.0% | ||||||||||||||||||||||
| Operating Income | 468,000 | 13.0% | Net Income | 656,000 | 9.4% | ||||||||||||||||||||||
| Other Income ( | 2,000 | 0.1% | Class Company, Inc. | ||||||||||||||||||||||||
| Statement of Cash Flows for Period Ending 12/31/2012 | |||||||||||||||||||||||||||
| Income Before Taxes | 470,000 | 13.1% | $s | ||||||||||||||||||||||||
| Cash Flows From Operating Activities: | |||||||||||||||||||||||||||
| Provision for Income Taxes | 231,000 | 6.4% | Net Income | 656,000 | ∆ | C - AD | $ 43,000 | ||||||||||||||||||||
| Plus: Depreciation | 208,000 | $ 160,000 | $ 48,000 | $ (6,000) | |||||||||||||||||||||||
| Net Income | 239,000 | 6.6% | Plus: Amortization Expense | 115,000 | $ 20,000 | $ 95,000 | $ 37,000 | ||||||||||||||||||||
| Changes in Current Assets and Liabilities | ∆ | Purchase [data] | BV | ||||||||||||||||||||||||
| (Increase) Accounts Receivable | (52,900) | ||||||||||||||||||||||||||
| Decrease Prepaid Expenses | 4,000 | ||||||||||||||||||||||||||
| Decrease Other Current Assets | 15,000 | ||||||||||||||||||||||||||
| Class Company, Inc. | Increase Accounts Payable | 40,000 | |||||||||||||||||||||||||
| Statement of Cash Flows for Period Ending 12/31/2012 | Increase Accrued Expenses | (10,000) | |||||||||||||||||||||||||
| (Decrease) Other Current Liabilities | (12,000) | ||||||||||||||||||||||||||
| $s | Other Changes | ||||||||||||||||||||||||||
| Cash Flows From Operating Activities: | Less: Gain om Sale of PPE | (6,000) | |||||||||||||||||||||||||
| Net Income | 239,000 | Increase in Deferred Taxes | 16,000 | defrred tax Non-current are Operating | |||||||||||||||||||||||
| Plus: Depreciation Expense | 125,000 | 113,000 | 12,000 | Decrease in Non-current Liabilities | 2,000 | Given: Financing unless otherwise indicated | |||||||||||||||||||||
| Plus: Amortization Expense | 25,000 | ||||||||||||||||||||||||||
| Less: Gain on Sale of PPE | (2,000) | Total Change in Cash from Operating Activities | 975,100 | ||||||||||||||||||||||||
| Changes in Current Assets and Liabilities | |||||||||||||||||||||||||||
| (Increase) Accounts Receivable | (63,000) | Cash From Investing Activities | |||||||||||||||||||||||||
| Decrease Prepaid Expenses | 8,000 | Sale of PPE | 43,000 | from data set | |||||||||||||||||||||||
| Increase Other Current Assets | 16,000 | Capital Expenditures: PPE | (125,000) | (40,000) | (85,000) | ||||||||||||||||||||||
| Increase Accounts Payable | 10,000 | Purchase of Intangibles | (95,000) | ∆ | cost sold | ||||||||||||||||||||||
| Increase Accrued Expenses | 13,000 | Other Non-Current assets | 4,000 | ||||||||||||||||||||||||
| (Decrease) Other Current Liabilities | (12,000) | Total Cash Flows from Investing Activities | (173,000) | ||||||||||||||||||||||||
| Other Changes | Cash Flows from Financing Activities | Dividends would be here as cash down | |||||||||||||||||||||||||
| Increase in Deferred Taxes | 16,000 | Sale of Stock:Increase in Invested Capital | 105,010 | ||||||||||||||||||||||||
| Decrease in OtherNon-current Liabilities | (2,000) | a given acct. detail not avail to student | New Debt | 470,000 | Current | Non-current | |||||||||||||||||||||
| Total Change in Cash from Operating Activities | 373,000 | Repayment of Debt | (625,000) | (470,000) | 30,000 | (185,000) | (155,000) | ||||||||||||||||||||
| Total Cash Flows from Financing Activities | (49,990) | New Debt (-) | |||||||||||||||||||||||||
| Cash From Investing Activities | |||||||||||||||||||||||||||
| Capital Expenditures | (197,000) | (173,000) | (24,000) | Net Change in Cash Position | 752,110 | 0 | Check | ||||||||||||||||||||
| Other Non-current Assets | 1,000 | Opening Cash Balance | 200,000 | ||||||||||||||||||||||||
| Proceeds from disposal of PPE | 14,000 | Ending Cash Balance | 952,110 | ||||||||||||||||||||||||
| Total Cash Flows from Investing Activities | (182,000) | ||||||||||||||||||||||||||
| Cash Flows from Financing Activities | |||||||||||||||||||||||||||
| Repayment of Debt | (600,000) | (185,000) | |||||||||||||||||||||||||
| Additional borrowing | 447,000 | 31,000 | 63,000 | current | 30,000 | ||||||||||||||||||||||
| Sale of Stock | 125,000 | 1,100,000 | 915,000 | non current | (470,000) | ||||||||||||||||||||||
| Use of treasury stock | 50,000 | 1,131,000 | 978,000 | (153,000) | |||||||||||||||||||||||
| Dividends paid | (23,000) | down | |||||||||||||||||||||||||
| Total Cash Flows from Financing Activities | (1,000) | ||||||||||||||||||||||||||
| Net Change in Cash Position | 190,000 | ||||||||||||||||||||||||||
| Opening Cash Balance | 150,000 | ||||||||||||||||||||||||||
| Ending Cash Balance | 340,000 | 0 | |||||||||||||||||||||||||
| Definition of | 1 of 2 | ||||||||||||||||||||||||||
| Cash Flow | |||||||||||||||||||||||||||
| This definition of cash flow provides a more accurate representation | |||||||||||||||||||||||||||
| the funds the company has available to repay its debt and | |||||||||||||||||||||||||||
| cash needs. | |||||||||||||||||||||||||||
| Cash flow from operations | |||||||||||||||||||||||||||
| = Net income: | |||||||||||||||||||||||||||
| =+ or - Non-cash Expenses (depreciation and amortization) | |||||||||||||||||||||||||||
| =+ or - Nonrecurring income and expenses (Extraordinary or discontinued Ops) | |||||||||||||||||||||||||||
| =+ or - Gain/loss on sales of fixed assets/LT intangibles - Other income/Expense | |||||||||||||||||||||||||||
| +/- Changes in operating accounts | |||||||||||||||||||||||||||
| (aka working capital accounts) | |||||||||||||||||||||||||||
| include: | |||||||||||||||||||||||||||
| • Accounts receivable | Current Assets and Current liabilities for the most part | ||||||||||||||||||||||||||
| • Inventory | |||||||||||||||||||||||||||
| • Prepaid assets | |||||||||||||||||||||||||||
| • Other short-term assets | |||||||||||||||||||||||||||
| • Accounts payable | |||||||||||||||||||||||||||
| • Accrued liabilities | |||||||||||||||||||||||||||
| • Other short-term liabilities | |||||||||||||||||||||||||||
| Notice that this list includes any asset or liability classified as short-term | |||||||||||||||||||||||||||
| or current on the balance sheet except: | |||||||||||||||||||||||||||
| • Cash and cash equivalents | we are measuring cash changes | ||||||||||||||||||||||||||
| • Short-term investments | that's a cash equivalent | ||||||||||||||||||||||||||
| • Notes payable | a note payable though short term is a form of debt, i.e., Financing | ||||||||||||||||||||||||||
| • Current Portion Long Term Debt | This is short term because it’s the part of the long term debt | ||||||||||||||||||||||||||
| due within 12 months but it's still debt to outside party | |||||||||||||||||||||||||||
| not a supplier | |||||||||||||||||||||||||||
| Notice that this section of the balance sheet that includes long term | |||||||||||||||||||||||||||
| assets or liabilities that relate to the Income Statement such as | |||||||||||||||||||||||||||
| LT term deferred tax assets or liabilities | |||||||||||||||||||||||||||
| Cash Flow from Investing Activities: | |||||||||||||||||||||||||||
| • Uses of cash to acquire assets, such as capital | |||||||||||||||||||||||||||
| expenditures, investments and acquisitions | |||||||||||||||||||||||||||
| • Funds raised when any of these types of assets are sold are | |||||||||||||||||||||||||||
| shown in this section as sources of cash | |||||||||||||||||||||||||||
| Cash Flow from Financing Activities: | |||||||||||||||||||||||||||
| Shows increases or decreases in all sources of external | |||||||||||||||||||||||||||
| financing, such as short-term bank borrowings, commercial | |||||||||||||||||||||||||||
| paper, long-term bank debt, other long-term debt and | |||||||||||||||||||||||||||
| subordinated debt | Bank & third party borrowings | ||||||||||||||||||||||||||
| Also includes equity transactions, such as cash generated by | |||||||||||||||||||||||||||
| stock issues or other capital injections, and cash used to | |||||||||||||||||||||||||||
| repurchase stock or to pay dividends | |||||||||||||||||||||||||||
| More invested capital less payments to owners | |||||||||||||||||||||||||||
| Debité = Cashê |
&P of &N---&D,&T---&F,&A---ACC220---HCT
Examine operating or financing
Run the business
External sources s
Internal Actions
C-14 Problems
| Ex 14 | ||||||
| Transaction | Operating | Investing | Financing | Source | Use | |
| a. | Short-term investment securities were purchased | X | X | |||
| b. | Equipment was purchased | X | X | |||
| c. | Accounts payable increased | X | X | |||
| d. | Deferred taxes decreased | X | X | |||
| e. | Long-term bonds were issued | X | X | |||
| f. | Common stock was sold | X | X | |||
| g. | A cash dividend was declared and paid | X | X | |||
| h. | Interest was paid to long-term creditors | X | X | |||
| i. | A long-term mortgage was entirely paid off | X | X | |||
| j. | Inventories decreased | X | X | |||
| k. | The company recorded net income of $1 million for the year | X | X | |||
| l. | Depreciation charges totaled $200,000 for the year | X | X | |||
| m. | Accounts receivable increased | X | X |
Ch.14 CF scan
| ClassCo sells machine AARP 657 for | $ 215,000 | sold for A/R | ||||||||||||||||||
| Realizes a gain on the IS of: | $ 42,000 | |||||||||||||||||||
| Cost basis | $ 446,000 | |||||||||||||||||||
| Accum. Depreciation [AD] | $ 273,000 | |||||||||||||||||||
| Book Value | $ 173,000 | |||||||||||||||||||
| Sell price - BV | $ 42,000 | |||||||||||||||||||
| Journal entry recorded | DR | CR | ||||||||||||||||||
| Accum. Depreciation [AD] | $ 273,000 | AD goes to -0- | ||||||||||||||||||
| Cost basis | $ 446,000 | Cost goes to -0- | ||||||||||||||||||
| Accts. Receivable | $ 215,000 | record A/R for sale | ||||||||||||||||||
| Gain on the Sale | $ 42,000 | |||||||||||||||||||
| For Cash Flow: | ||||||||||||||||||||
| Deduct gain from Operating | $ (42,000) | |||||||||||||||||||
| Record Sale in Investing | $ 215,000 | |||||||||||||||||||
| Add Cost of asset sold for Investing | $ (446,000) | =∆ BS change - amt of cost sold for Purchase of Fixed assets/PPE | ||||||||||||||||||
| Add AD sold to ∆ AD on BS for Deprec. Exp. | $ 273,000 | = ∆ AD from BS + AD sold for Deprec. Expense | ||||||||||||||||||
| Sum | 0.00 | |||||||||||||||||||
| No netting: | Portion of Balance Sheet | |||||||||||||||||||
| Current Portion of Long Term Debt | 260,000 | 290,000 | 30,000 | 30,000 | ||||||||||||||||
| Accounts Payable | 720,000 | 760,000 | 40,000 | 40,000 | ||||||||||||||||
| Accrued Expenses | 50,000 | 40,000 | (10,000) | (10,000) | ||||||||||||||||
| Other Current Liabilities | 23,000 | 11,000 | (12,000) | (12,000) | ||||||||||||||||
| Total Current Liabilities | 1,053,000 | 1,101,000 | ||||||||||||||||||
| Non-Current Liabilities | ||||||||||||||||||||
| Long Term Debt | 1,100,000 | 915,000 | (185,000) | (185,000) | ||||||||||||||||
| Current Portion | Long | |||||||||||||||||||
| Financing: Debt | Long Term Debt | Term Debt | Combined | |||||||||||||||||
| $ 30,000 | (185,000) | $ (155,000) | ||||||||||||||||||
| Example A: Acquired New Debt | $200,000 | |||||||||||||||||||
| SO, if added | $200,000 | AND Debt decreased | ($155,000) | |||||||||||||||||
| Then you paid | ($355,000) | |||||||||||||||||||
| Shown both in Financing section of Cash Flow | ||||||||||||||||||||
| Acquired new debt | $200,000 | |||||||||||||||||||
| AND | Repayment of Debt | ($355,000) | ||||||||||||||||||
| Example A: Paid existing Debt | $260,000 | |||||||||||||||||||
| SO, if paid | $260,000 | AND Debt decreased | ($155,000) | |||||||||||||||||
| Then you borrowed | $105,000 | |||||||||||||||||||
| Shown both in Financing section of Cash Flow | ||||||||||||||||||||
| Repayment of Debt | $260,000 | |||||||||||||||||||
| AND | Acquired new debt | $105,000 | ||||||||||||||||||
ACC220---&P of &N---&D, &T,&F, &A---HCT
Dividends are Financing
Ch.15 Def
| Ch. 15 Ratios | ||||||||||||
| Ratio | Method of computation | Measure of | Significance | Better | ||||||||
| Operating Profit [Income] Margin | Operating Profit/Net Sales | Risk | Measures profit generated after consideration of operating expenses | 1 | é | |||||||
| Net Profit [Income] Margin | Net Profit/Net Sales | Risk | Measures profit generated after consideration of all expenses and revenues | 2 | é | |||||||
| Gross Profit Margin | Gross Profit /Net Sales | Risk | Measures profit generated after consideration of cost of products sold | 3 | é | |||||||
| Working Capital | Current assets - current liabilities | Liquidity | Measures ability to meet current obligations from current assets | 4 | é | |||||||
| Current Ratio | Current Assets/Current Liabilities | Liquidity | Measures short term liquidity, the ability of firm to meet needs for cash as they arise | 5 | é | |||||||
| Quick or Acid Test | Current Assets – Inventory/Current Liabilities | Liquidity | Measures short term liquidity more rigorously than the Current Ratio by eliminating inventory (usually the least liquid asset) | 6 | é | |||||||
| Accounts Receivable Turnover | Net Sales /Avge,Accounts Receivable | Asset utilization | Indicates how many times receivables are collected during a year on average | 7 | é | |||||||
| Average Collection Period | Avge. Receivable/Net Sales/365 OR 365/AR turnover | Asset utilization | Indicates days required to convert receivables into cash | 8 | ê | |||||||
| Inventory Turnover | Cost of Good Sold/Avge.Inventory | Asset utilization | Measures efficiency of the firm in managing and selling inventory | 9 | é | |||||||
| Days of Inventory | 365/Days of Inventory | Asset utilization | Measures efficiency of the firm in managing and selling inventory | 10 | ê | |||||||
| Total Asset Turnover | Net Sales/Total average Assets | Asset utilization | Measures efficiency of the firm in managing all assets | 11 | é | |||||||
| Earnings Per Common Share | Net Earnings/Average Common Shares Outstanding | Market Price | Shows return to common stock holder for each share owned | 12 | é | |||||||
| Times Interest Earned | Operating Profit/Interest Expense | Risk | Measures how many times interest expense is covered by operating earnings | 13 | é | |||||||
| Return on Equity | Net Earnings/Avge.Stockholder’s Equity | Profitability | Measures rate of return on stockholders (owners) investment | 14 | é | |||||||
| Price to Earnings | Market Price of Common Stock/Earnings Per Share | Market Price | Expresses multiple that the stock market places on firm’s earnings | 15 | é | |||||||
| Dividend Payout | Dividends Per Share/Earnings Per Share | Market Price | Shows percentage of earnings paid to shareholders | 16 | é | |||||||
| Dividend Yield | Dividends Per Share/Market Price of Common Stock | Market Price | Shows rate earned by shareholders from dividends relative to current price of stock | 17 | é | |||||||
| Return on Assets aka Return on Investment | Net Earnings/Average Total Assets | Profitability Asset Utilization | Measures overall efficiency of firm in managing assets and generating profits | 18 | é | |||||||
| Return on Common Equity | Net Earnings-Preferred dividends/average common equity | Profitability | Measures rate of return on stockholders (owners) investment | 19 | é | |||||||
| Book Value per Share | Ending Common equity /Ending common shares | 20 | é | |||||||||
| Financial Leverage | Financial leverage results from the difference between the rate of return the company earns on investments in its own assets and the rate of return that the company must pay its creditors. | 0 | Measures efficient use of debt and use of assets | 21 | é | |||||||
| Debt To Equity | Total Liabilities/Stockholder’s Equity | Risk | Measures debt relative to equity base | 22 | ê | |||||||
| Debt Ratio | Total Liabilities/Total Assets | Risk | Shows proportion of all assets that are financed with debt | 23 | ê | |||||||
| Cash Flow Liquidity | Cash + Marketable Securities + Operating Cash Flows/Current Liabilities | Liquidity | Measure short term liquidity b considering as cash resources (numerator) cash plus cash equivalents plus cash flow from operating activities | 24 | é | |||||||
| Cash Flow Margin | Cash Flow from Operating Activities/Net Sales | Risk | Measures the ability of the firm to generate cash from sales | 25 | é | |||||||
| Cash Return on Assets | Cash Flow from Operating Activities/Average Total Assets | Asset Utilization | Measures the return on assets on a cash basis | 26 | é | |||||||
| Fixed Asset Turnover | Net Sales/Average Net Property, Plant and Equipment | Asset utilization | Measures efficiency of the firm in managing fixed assets | 27 | é | |||||||
| Fixed Charge Coverage | Operating Profit + Lease Payments/Interest Expense + Lease Payments | Risk | Measures coverage capability more broadly than times interest earned by including lease payments as fixed expenses | 28 | é | |||||||
| Long Term Debt to Total Capitalization | Long Term Debt/Long Term Debt + Stockholder’s Equity | Risk | Measures extent to which long term debt is used for permanent financing | 29 | ê | |||||||
| Ch. 15 Ratio Analysis-Financial Statement Analysis | ||||||||||||
| Vertical | Horizontal | Trend | ||||||||||
| % ∆ from a base year | ||||||||||||
| Period to Period | ||||||||||||
| BS | IS | ∆ 2xx1 from 2xx0 | ||||||||||
| Total | Revenue | Either % or Amount or | ||||||||||
| Assets | [or Sales | Both | ||||||||||
| [Assets] | or Net Rev.] | ∆ 2xx2from 2xx1 | ||||||||||
| = | = | ∆ 2xx3 from 2xx2 | ||||||||||
| 100% | 100% | ∆ 2xx4 from 2xx3 | ||||||||||
| ∆ 2xx5 from 2xx5 | ||||||||||||
| ∆ 2xx1 from 2xx0 | ||||||||||||
| ∆ 2xx2 from 2xx0 | ||||||||||||
| ∆ 2xx3 from 2xx0 | ||||||||||||
| ∆ 2xx4 from 2xx0 | ||||||||||||
| ∆ 2xx5 from 2xx0 | ||||||||||||
Use student Ch.15 File
Ch. 15 H and V
| Cablevision | Comcast | Cablevision | Comcast | Chapter 15 | ||||||||||
| 12/31/2xx5 | 12/31/2xx5 | 12/31/2xx5 | 12/31/2xx5 | |||||||||||
| Sales | 6701 | 55842 | 100.0% | 100.0% | ||||||||||
| Cost Of Goods | 2969 | 37485 | 44.3% | 67.1% | ||||||||||
| Gross Profit | 3732 | 18357 | 55.7% | 32.9% | ||||||||||
| Selling & Adminstrative & Depr. & Amort Expenses | 2504 | 7636 | 37.4% | 13.7% | Vertical | |||||||||
| Income After Depreciation & Amortization [Oper.Income] | 1229 | 10721 | 18.3% | 19.2% | Analysis | |||||||||
| Non-Operating Income | -59 | -9 | -0.9% | -0.0% | ||||||||||
| Interest Expense | 747 | 2505 | 11.1% | 4.5% | ||||||||||
| Pretax Income | 423 | 8207 | 6.3% | 14.7% | ||||||||||
| Income Taxes | 184 | 3050 | 2.8% | 5.5% | ||||||||||
| Minority Interest | 0 | 997 | 0.0% | 1.8% | ||||||||||
| Income From Cont. Operations | 239 | 5157 | 3.6% | 9.2% | ||||||||||
| Extras & Discontinued Operations | 54 | 0 | 0.8% | 0.0% | ||||||||||
| Net Income | 292 | 4160 | 4.4% | 7.4% | ||||||||||
| Depreciation Footnote | ||||||||||||||
| Income Before Depreciation & Amortization | 2290 | 25144 | 34.2% | 45.0% | ||||||||||
| Depreciation & Amortization (Cash Flow) | 1062 | 14423 | 15.8% | 25.8% | ||||||||||
| Income After Depreciation & Amortization | 1229 | 10721 | 18.3% | 19.2% | ||||||||||
| Earnings Per Share Data | ||||||||||||||
| Average Shares | 285 | 2,778 | 4.3% | 5.0% | ||||||||||
| Diluted EPS Before Non-Recurring Items | $ 1.03 | $ 1.58 | ||||||||||||
| Diluted Net EPS | $ 1.02 | $ 1.50 | ||||||||||||
| Cablevision | Comcast | Cablevision | Comcast | Vertical | ||||||||||
| 12/31/2xx5 | 12/31/2xx5 | 12/31/2xx5 | 12/31/2xx5 | Analysis | ||||||||||
| Assets | ||||||||||||||
| Cash & Equivalents | 832 | 1,620 | 11.7% | 1.0% | ||||||||||
| Receivables | 302 | 4,351 | 4.2% | 2.8% | ||||||||||
| Other Current Assets | 305 | 2,602 | 4.3% | 1.6% | ||||||||||
| Total Current Assets | 1355 | 8,573 | 19.0% | 5.4% | ||||||||||
| Net Property & Equipment | 3269 | 27,559 | 45.8% | 17.5% | ||||||||||
| Investments & Advances | 318 | 9,854 | 4.5% | 6.2% | ||||||||||
| Other Non-Current Assets | 3 | 0 | 0.0% | 0.0% | ||||||||||
| Deferred Charges | 134 | 0 | 1.9% | 0.0% | ||||||||||
| Intangibles | 1992 | 104,415 | 27.9% | 66.2% | ||||||||||
| Deposits & Other Assets | 72 | 7,417 | 1.0% | 4.7% | ||||||||||
| Total Assets | 7143 | 157,818 | 100.0% | 100.0% | ||||||||||
| 0.0% | 0.0% | |||||||||||||
| Liabilities & Shareholder's Equity | 0.0% | 0.0% | ||||||||||||
| Notes Payable | 18 | 0 | 0.2% | 0.0% | ||||||||||
| Accounts Payable | 488 | 5,705 | 6.8% | 3.6% | ||||||||||
| Current Portion Long-Term Debt | 339 | 1,367 | 4.7% | 0.9% | ||||||||||
| Current Portion Capital Leases | 9 | 0 | 0.1% | 0.0% | ||||||||||
| Accrued Expenses | 604 | 5,379 | 8.5% | 3.4% | ||||||||||
| Other Current Liabilities | 137 | 790 | 1.9% | 0.5% | ||||||||||
| Total Current Liabilities | 1595 | 13,241 | 22.3% | 8.4% | ||||||||||
| Mortgages | 0 | 0 | 0.0% | 0.0% | ||||||||||
| Deferred Taxes/Income | 91 | 29,932 | 1.3% | 19.0% | ||||||||||
| Long-Term Debt | 10759 | 37,942 | 150.6% | 24.0% | ||||||||||
| Non-Current Capital Leases | 34 | 0 | 0.5% | 0.0% | ||||||||||
| Other Non-Current Liabilities | 224 | 13,034 | 3.1% | 8.3% | Vertical | |||||||||
| Minority Interest (Liabilities) | 14 | 16,014 | 0.2% | 10.1% | Analysis | |||||||||
| Total Liabilities | 12717 | 110,163 | 178.0% | 69.8% | ||||||||||
| Shareholder's Equity | ||||||||||||||
| Common Stock (Par) | 3 | 32 | 0.0% | 0.0% | ||||||||||
| Capital Surplus | 1051 | 40,940 | 14.7% | 25.9% | ||||||||||
| Retained Earnings | -5245 | 13,971 | -73.4% | 8.9% | ||||||||||
| Other Equity | -20 | 229 | -0.3% | 0.1% | ||||||||||
| Treasury Stock | 1364 | 7,517 | 19.1% | 4.8% | ||||||||||
| Total Shareholder's Equity | -5574 | 47,655 | -78.0% | 30.2% | ||||||||||
| Total Liabilities & Shareholder's Equity | 7143 | 157,818 | 100.0% | 100.0% | ||||||||||
| Total Common Equity | -5574 | 47,655 | -78.0% | 30.2% | ||||||||||
| Shares Outstanding | 279 | 2,705.90 | 3.9% | 1.7% | ||||||||||
| Book Value Per Share | $ (19.95) | $ 17.61 | -0.3% | 0.0% | ||||||||||
| Five Years | Horizontal | |||||||||||||
| Cablevision | December 31 | Analysis | 08 - 07 | 2007 | ||||||||||
| 2xx5 | 2xx4 | 2xx3 | 2xx2 | 2xx1 | 2xx5 | 2xx4 | 2xx3 | 2xx2 | 2xx2 | Base | $Δ | |||
| Sales | 6,701 | 7,231 | 7,773 | 7,230 | 6,484 | -7.3% | -7.0% | 7.5% | 11.5% | 746 | 6,484 | 11.5% | ||
| Cost Of Goods | 2,969 | 3,008 | 3,369 | 3,244 | 2,891 | -1.3% | -10.7% | 3.8% | 12.2% | 353 | 2,891 | 12.2% | ||
| Gross Profit | 3,732 | 4,223 | 4,404 | 3,986 | 3,593 | -11.6% | -4.1% | 10.5% | 10.9% | 393 | 3,593 | 10.9% | ||
| Selling & Adminstrative & Depr. & Amort Expenses | 2,504 | 2,694 | 2,989 | 3,296 | 2,677 | -7.1% | -9.8% | -9.3% | 23.1% | 619 | 2,677 | 23.1% | ||
| Income After Depreciation & Amortization [Oper.Income] | 1,229 | 1,529 | 1,415 | 690 | 916 | -19.6% | 8.0% | 105.2% | -24.7% | (226) | 916 | -24.7% | ||
| Non-Operating Income | (59) | (151) | (141) | (202) | 124 | -60.8% | 6.8% | -30.2% | -262.4% | (327) | 124 | -262.4% | ||
| Interest Expense | 747 | 787 | 753 | 797 | 806 | -5.1% | 4.5% | -5.5% | -1.2% | (9) | 806 | -1.2% | ||
| Pretax Income | 423 | 591 | 521 | (309) | 234 | -28.4% | 13.5% | -268.4% | -232.3% | (543) | 234 | -232.3% | ||
| Income Taxes | 184 | 226 | 236 | (83) | 135 | -18.2% | -4.3% | -385.1% | -161.4% | |||||
| Minority Interest | 0 | 1 | (0) | 0 | 0 | -34.4% | -337.0% | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||
| Income From Cont. Operations | 239 | 366 | 285 | (227) | 99 | -34.7% | 28.2% | -225.9% | -328.5% | |||||
| Extras & Discontinued Operations | 54 | (4) | (0) | (1) | 195 | -1401.5% | 41100.0% | -98.9% | -100.5% | |||||
| Net Income | 292 | 361 | 286 | (228) | 294 | -19.1% | 26.4% | -225.5% | -177.4% | |||||
| ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||||||||
| Depreciation Footnote | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||||||
| Income Before Depreciation & Amortization | 2,290 | 2,812 | 2,771 | 2,442 | 2,259 | -18.6% | 1.5% | 13.5% | 8.1% | |||||
| Depreciation & Amortization (Cash Flow) | 1,062 | 1,283 | 1,355 | 1,752 | 1,344 | -17.3% | -5.3% | -22.6% | 30.4% | |||||
| Income After Depreciation & Amortization | 1,229 | 1,529 | 1,415 | 690 | 916 | -19.6% | 8.0% | 105.2% | -24.7% | |||||
| ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||||||||
| Earnings Per Share Data | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||||||
| Average Shares | 285 | 302 | 298 | 290 | 295 | -5.6% | 1.2% | 2.8% | -1.5% | |||||
| Diluted EPS Before Non-Recurring Items | $ 1.03 | $ 1.21 | $ 1.13 | $ 0.94 | $ 0.09 | -14.9% | 7.1% | 20.2% | 944.4% | |||||
| Diluted Net EPS | $ 1.02 | $ 1.20 | $ 0.96 | $ (0.78) | $ 0.74 | -15.0% | 25.0% | -223.1% | -205.4% | |||||
| Five Years | Horizontal | |||||||||||||
| Comcast | Analysis | |||||||||||||
| 12/31/11 | 12/31/10 | 12/31/09 | 12/31/08 | 12/31/07 | 12/31/11 | 12/31/10 | 12/31/09 | 12/31/08 | ||||||
| Sales | 55,842 | 37,937 | 35,756 | 34,256 | 30,895 | 47.2% | 6.1% | 4.4% | 10.9% | |||||
| Cost Of Goods | 37,485 | 15,250 | 14,396 | 13,472 | 11,175 | 145.8% | 5.9% | 6.9% | 20.6% | |||||
| Gross Profit | 18,357 | 22,687 | 21,360 | 20,784 | 19,720 | -19.1% | 6.2% | 2.8% | 5.4% | |||||
| Selling & Adminstrative & Depr. & Amort Expenses | 7,636 | 14,707 | 14,146 | 14,052 | 14,142 | -48.1% | 4.0% | 0.7% | -0.6% | |||||
| Income After Depreciation & Amortization [Oper.Income] | 10,721 | 7,980 | 7,214 | 6,732 | 5,578 | 34.3% | 10.6% | 7.2% | 20.7% | |||||
| Non-Operating Income | -9 | 280 | 240 | -235 | 1,060 | -103.2% | 16.7% | -202.1% | -122.2% | |||||
| Interest Expense | 2,505 | 2,156 | 2,348 | 2,439 | 2,289 | 16.2% | -8.2% | -3.7% | 6.6% | |||||
| Pretax Income | 8,207 | 6,104 | 5,106 | 4,058 | 4,349 | 34.5% | 19.5% | 25.8% | -6.7% | |||||
| Income Taxes | 3,050 | 2,436 | 1,478 | 1,533 | 1,800 | 25.2% | 64.8% | -3.6% | -14.8% | |||||
| Minority Interest | 997 | 33 | -10 | -22 | -38 | 2921.2% | -430.0% | -54.5% | -42.1% | |||||
| Investment Gains/Losses | 0 | 0 | 0 | 0 | 0 | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||
| Other Income/Charges | 0 | 0 | 0 | 0 | 0 | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||
| Income From Cont. Operations | 5,157 | 3,668 | 3,628 | 2,547 | 2,587 | 40.6% | 1.1% | 42.4% | -1.5% | |||||
| Extras & Discontinued Operations | 0 | 0 | 0 | 0 | 0 | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||
| Net Income | 4,160 | 3,635 | 3,638 | 2,547 | 2,587 | 14.4% | -0.1% | 42.8% | -1.5% | |||||
| ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||||||||
| Depreciation Footnote | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||||||
| Income Before Depreciation & Amortization | 25,144 | 14,596 | 13,714 | 13,132 | 11,786 | 72.3% | 6.4% | 4.4% | 11.4% | |||||
| Depreciation & Amortization (Cash Flow) | 14,423 | 6,616 | 6,500 | 6,400 | 6,208 | 118.0% | 1.8% | 1.6% | 3.1% | |||||
| Income After Depreciation & Amortization | 10,721 | 7,980 | 7,214 | 6,732 | 5,578 | 34.3% | 10.6% | 7.2% | 20.7% | |||||
| ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||||||||
| Earnings Per Share Data | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||||||
| Average Shares | 2,778 | 2,820 | 2,885 | 2,952 | 3,129 | -1.5% | -2.3% | -2.3% | -5.7% | |||||
| Diluted EPS Before Non-Recurring Items | $ 1.58 | $ 1.31 | $ 1.10 | $ 0.91 | $ 0.74 | 20.6% | 19.1% | 20.9% | 23.0% | |||||
| Diluted Net EPS | $ 1.50 | $ 1.29 | $ 1.26 | $ - 0 | 16.3% | 2.4% | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Cablevision | Horizontal | |||||||||||||
| Analysis -- TREND | ||||||||||||||
| Assets | 12/31/11 | 12/31/10 | 12/31/09 | 12/31/08 | 12/31/07 | 12/31/11 | 12/31/10 | 12/31/09 | 12/31/08 | |||||
| Cash & Equivalents | 832 | 631 | 498 | 515 | 586 | 31.9% | 26.7% | -3.3% | -12.2% | |||||
| Receivables | 302 | 543 | 615 | 605 | 543 | -44.4% | -11.6% | 1.7% | 11.4% | |||||
| Other Current Assets | 305 | 574 | 1,464 | 1,025 | 998 | -46.8% | -60.8% | 42.9% | 2.6% | |||||
| Total Current Assets | 1,355 | 1,640 | 2,055 | 1,859 | 2,128 | -17.4% | -20.2% | 10.6% | -12.6% | |||||
| Net Property & Equipment | 3,269 | 3,431 | 3,316 | 3,473 | 3,472 | -4.7% | 3.5% | -4.5% | 0.0% | |||||
| Investments & Advances | 318 | 236 | 226 | 181 | 668 | 34.7% | 4.4% | 24.7% | -72.9% | |||||
| Other Non-Current Assets | 3 | 23 | 40 | 45 | 41 | -85.9% | -42.2% | -11.6% | 11.3% | |||||
| Deferred Charges | 134 | 360 | 246 | 253 | 1,269 | -62.9% | 46.7% | -2.8% | -80.1% | |||||
| Intangibles | 1,992 | 2,509 | 2,779 | 2,896 | 1,809 | -20.6% | -9.7% | -4.0% | 60.1% | |||||
| Deposits & Other Assets | 72 | 642 | 664 | 676 | 123 | -88.7% | -3.4% | -1.8% | 451.2% | |||||
| Total Assets | 7,143 | 8,841 | 9,326 | 9,383 | 9,510 | -19.2% | -5.2% | -0.6% | -1.3% | |||||
| ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||||||||
| Liabilities & Shareholder's Equity | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||||||
| Notes Payable | 18 | 0 | 0 | 6 | 830 | ERROR:#DIV/0! | ERROR:#DIV/0! | -100.0% | -99.2% | |||||
| Accounts Payable | 488 | 508 | 401 | 386 | 370 | -3.9% | 26.7% | 4.0% | 4.3% | |||||
| Current Portion Long-Term Debt | 339 | 695 | 531 | 693 | 0 | -51.2% | 30.7% | -23.3% | ERROR:#DIV/0! | |||||
| Current Portion Capital Leases | 9 | 6 | 6 | 5 | 5 | 50.3% | 6.3% | 8.1% | -0.7% | |||||
| Accrued Expenses | 604 | 718 | 801 | 894 | 801 | -15.9% | -10.3% | -10.4% | 11.6% | |||||
| Other Current Liabilities | 137 | 235 | 331 | 313 | 312 | -41.7% | -29.0% | 5.8% | 0.3% | |||||
| Total Current Liabilities | 1,595 | 2,162 | 2,070 | 2,297 | 2,318 | -26.2% | 4.4% | -9.9% | -0.9% | |||||
| Mortgages | 0 | 0 | 0 | 0 | 0 | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||
| Deferred Taxes/Income | 91 | 11 | 556 | 174 | 582 | 702.8% | -98.0% | 219.1% | -70.1% | |||||
| Long-Term Debt | 10,759 | 12,081 | 10,789 | 11,229 | 9,225 | -10.9% | 12.0% | -3.9% | 21.7% | |||||
| Non-Current Capital Leases | 34 | 45 | 51 | 57 | 60 | -26.0% | -10.7% | -10.2% | -5.9% | |||||
| Other Non-Current Liabilities | 224 | 821 | 1,003 | 980 | 756 | -72.7% | -18.1% | 2.3% | 29.7% | |||||
| Minority Interest (Liabilities) | 14 | 15 | 12 | 8 | 1 | -6.3% | 20.7% | 56.8% | 557.6% | |||||
| Total Liabilities | 12,717 | 15,136 | 14,481 | 14,745 | 12,942 | -16.0% | 4.5% | -1.8% | 13.9% | |||||
| Shareholder's Equity | ||||||||||||||
| Common Stock (Par) | 3 | 3 | 3 | 3 | 0 | 0.6% | 1.5% | 1.9% | 2827.3% | |||||
| Capital Surplus | 1,051 | 6 | 90 | 137 | 183 | 16176.0% | -92.8% | -34.5% | -25.0% | |||||
| Retained Earnings | (5,245) | (5,495) | (4,750) | (5,034) | (3,618) | -4.5% | 15.7% | -5.6% | 39.1% | |||||
| Other Equity | (20) | (22) | (49) | (35) | 3 | -10.1% | -55.7% | 40.6% | -1350.0% | |||||
| Treasury Stock | 1,364 | 789 | 450 | 433 | 0 | 72.9% | 75.4% | 3.7% | ||||||
| Total Shareholder's Equity | (5,574) | (6,295) | (5,155) | (5,362) | (3,432) | -11.5% | 22.1% | -3.9% | 56.2% | |||||
| Total Liabilities & Shareholder's Equity | 7,143 | 8,841 | 9,326 | 9,383 | 9,510 | -19.2% | -5.2% | -0.6% | -1.3% | |||||
| Total Common Equity | (5,574) | (6,295) | (5,155) | (5,362) | (3,432) | -11.5% | 22.1% | -3.9% | 56.2% | |||||
| Shares Outstanding | 279 | 300 | 302 | 297 | 294 | -6.9% | -0.6% | 1.6% | 1.0% | |||||
| Book Value Per Share | $ (19.95) | $ (20.98) | $ (17.09) | $ (18.05) | $ (11.67) | -4.9% | 22.8% | -5.3% | 54.7% | |||||
| Comcast | Horizontal | |||||||||||||
| Analysis -- Trend | ||||||||||||||
| Assets | 12/31/11 | 12/31/10 | 12/31/09 | 12/31/08 | 12/31/07 | 12/31/11 | 12/31/10 | 12/31/09 | 12/31/08 | |||||
| Cash & Equivalents | 1,620 | 6,065 | 721 | 1,254 | 1,061 | -73.3% | 741.2% | -42.5% | 18.2% | |||||
| Receivables | 4,351 | 1,855 | 1,711 | 1,626 | 1,645 | 134.6% | 8.4% | 5.2% | -1.2% | |||||
| Other Current Assets | 2,602 | 1,140 | 1,031 | 1,128 | 961 | 128.2% | 10.6% | -8.6% | 17.4% | |||||
| Total Current Assets | 8,573 | 8,886 | 3,223 | 3,716 | 3,667 | -3.5% | 175.7% | -13.3% | 1.3% | |||||
| Net Property & Equipment | 27,559 | 23,515 | 23,855 | 24,444 | 23,624 | 17.2% | -1.4% | -2.4% | 3.5% | |||||
| Investments & Advances | 9,854 | 6,670 | 5,947 | 4,783 | 7,963 | 47.7% | 12.2% | 24.3% | -39.9% | |||||
| Intangibles | 104,415 | 78,002 | 78,490 | 78,896 | 77,521 | 33.9% | -0.6% | -0.5% | 1.8% | |||||
| Deposits & Other Assets | 7,417 | 1,461 | 1,218 | 1,178 | 642 | 407.7% | 20.0% | 3.4% | 83.5% | |||||
| Total Assets | 157,818 | 118,534 | 112,733 | 113,017 | 113,417 | 33.1% | 5.1% | -0.3% | -0.4% | |||||
| Liabilities & Shareholder's Equity | ||||||||||||||
| Accounts Payable | 5,705 | 3,291 | 3,094 | 3,393 | 3,336 | 73.4% | 6.4% | -8.8% | 1.7% | |||||
| Current Portion Long-Term Debt | 1,367 | 1,800 | 1,156 | 2,278 | 1,495 | -24.1% | 55.7% | -49.3% | 52.4% | |||||
| Accrued Expenses | 5,379 | 3,143 | 2,999 | 624 | 494 | 71.1% | 4.8% | 380.6% | 26.3% | |||||
| Other Current Liabilities | 790 | 0 | 0 | 2,644 | 2,627 | -100.0% | 0.6% | |||||||
| Total Current Liabilities | 13,241 | 8,234 | 7,249 | 8,939 | 7,952 | 60.8% | 13.6% | -18.9% | 12.4% | |||||
| Deferred Taxes/Income | 29,932 | 28,246 | 27,800 | 26,982 | 26,880 | 6.0% | 1.6% | 3.0% | 0.4% | |||||
| Long-Term Debt | 37,942 | 29,615 | 27,940 | 30,178 | 29,828 | 28.1% | 6.0% | -7.4% | 1.2% | |||||
| Other Non-Current Liabilities | 13,034 | 7,862 | 6,767 | 6,171 | 7,167 | 65.8% | 16.2% | 9.7% | -13.9% | |||||
| Minority Interest (Liabilities) | 16,014 | 143 | 166 | 297 | 250 | 11098.6% | -13.9% | -44.1% | 18.8% | |||||
| Total Liabilities | 110,163 | 74,100 | 69,922 | 72,567 | 72,077 | 48.7% | 6.0% | -3.6% | 0.7% | |||||
| Shareholder's Equity | ||||||||||||||
| Common Stock (Par) | 32 | 32 | 32 | 33 | 34 | 0.0% | 0.0% | -3.0% | -2.9% | |||||
| Capital Surplus | 40,940 | 39,780 | 40,247 | 40,620 | 41,688 | 2.9% | -1.2% | -0.9% | -2.6% | |||||
| Retained Earnings | 13,971 | 12,158 | 10,005 | 7,427 | 7,191 | 14.9% | 21.5% | 34.7% | 3.3% | |||||
| Other Equity | 229 | -19 | 44 | -113 | -56 | -1305.3% | -143.2% | -138.9% | 101.8% | |||||
| Treasury Stock | 7,517 | 7,517 | 7,517 | 7,517 | 7,517 | 0.0% | 0.0% | 0.0% | 0.0% | |||||
| Total Shareholder's Equity | 47,655 | 44,434 | 42,811 | 40,450 | 41,340 | 7.2% | 3.8% | 5.8% | -2.2% | |||||
| Total Liabilities & Shareholder's Equity | 157,818 | 118,534 | 112,733 | 113,017 | 113,417 | 33.1% | 5.1% | -0.3% | -0.4% | |||||
| Total Common Equity | 47,655 | 44,434 | 42,811 | 40,450 | 41,340 | 7.2% | 3.8% | 5.8% | -2.2% | |||||
| Shares Outstanding | 2,705.90 | 2,776.50 | 2,837.50 | 2,880.60 | 3,011 | -2.5% | -2.1% | -1.5% | -4.3% | |||||
| Book Value Per Share | $ 17.61 | $ 16.00 | $ 15.09 | $ 14.04 | $ 13.73 | 10.1% | 6.0% | 7.5% | 2.3% |
HCT---ACC220---&P of &N---&D,&T---&F,&A
Use student Ch.15 File
Ch. 15 Ratios
| Ratio Definitions [1] | Ch. 15 Financial Ratios | FORD MOTOR COMPANY AND SUBSIDIARIES | |||||||||||||
| these ar ratios for HW | CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||
| PE = Period End | For the Years Ended December 31, 2011, 2010, and 2009 | ||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| 1 | Current ratio | ||||||||||||||
| PE Current assets / Current liabilities | |||||||||||||||
| 2011 | 2010 | 2009 | |||||||||||||
| 2 | Quick Ratio | ||||||||||||||
| PE Cash + Marketable securities + Short term investment + A/R / Current liabilities | Revenues | ||||||||||||||
| Total revenues | 136,264 | 128,954 | 116,283 | ||||||||||||
| 3 | Average collection period [days] | ||||||||||||||
| 365 X [ 2 pt average A/R / Net credit sales] | Costs and expenses | ||||||||||||||
| CoGS | 113,345 | 104,451 | 98,866 | ||||||||||||
| OR 365 / A/R turnover | |||||||||||||||
| Selling, administrative and other expenses | 11,578 | 11,909 | 13,029 | ||||||||||||
| 5 | A/R turnover [ assume all sales are credit sales] | ||||||||||||||
| Net Credit Sales (or Revenue) / 2 pt. average A/R | Interest expense | 4,431 | 6,152 | 6,790 | |||||||||||
| Note: if unknown assume all line sales, revenue are credit | |||||||||||||||
| 6 | Inventory turnover | Financial Services provision for credit and insurance losses | -33 | -216 | 1,030 | ||||||||||
| Net Credit Sales (or Revenue) / 2 pt. average A/R | Total costs and expenses | 129,321 | 122,296 | 119,715 | |||||||||||
| 7 | Inventory days | ||||||||||||||
| 365 / Inventory turnover | Automotive interest income and other non-operating income/(expense), | 825 | (362 | 5,284 | |||||||||||
| 8 | Fixed asset turnover | Financial Services other income/(loss), net (Note 19) | 413 | 315 | 552 | ||||||||||
| Net sales or revenue / Net Fxd. Assets | Equity in net income/(loss) of affiliated companies | 500 | 538 | 195 | |||||||||||
| 9 | Debt ratio | Income/(Loss) before income taxes | 8,681 | 7,149 | 2,599 | ||||||||||
| Total assets / Total liabilities | |||||||||||||||
| Provision for/(Benefit from) income taxes (Note 22) | -11541 | 592 | -113 | ||||||||||||
| 10 | Debt to equity | ||||||||||||||
| Total liabilities / Total equity | Income/(Loss) from continuing operations | 20,222 | 6,557 | 2,712 | |||||||||||
| 11 | Times interest earned | Ratio Definitions [2] | Income/(Loss) from discontinued operations | — | — | 5 | |||||||||
| Net income before interest & taxes / [Interest expense - interest income] | |||||||||||||||
| this = net interest expense | Net income/(loss) | 20,222 | 6,557 | 2,717 | |||||||||||
| 12 | Gross Profit % | ||||||||||||||
| [Revenue - CoGS] / Net sales, revenue | Less: Income/(Loss) attributable to noncontrolling interests | 9 | (4 | — | |||||||||||
| 13 | Operating income % | Net income/(loss) attributable to Ford Motor Company | $ | $ | $ | ||||||||||
| Operating income / Sales or revenue | |||||||||||||||
| 14 | Net income % | NET INCOME/(LOSS) ATTRIBUTABLE TO FORD MOTOR COMPANY | |||||||||||||
| Net income [bottom line] / net sales or revenue | Income/(Loss) from continuing operations | $ | $ | $ | |||||||||||
| 15 | Return on assets [ROI] | Net income/(loss) attributable to Ford Motor Company | $ | $ | $ | ||||||||||
| Net income / 2 pt. average total assets | |||||||||||||||
| Less: Income/(Loss) attributable to noncontrolling interests | 9 | -4 | |||||||||||||
| 16 | PE ratio | ||||||||||||||
| Net income per share / stock price per share | Net income/(loss) attributable to Ford Motor Company | 20,213 | 6,561 | 2,717 | |||||||||||
| 17 | Earnings per share [undiluted] | ||||||||||||||
| Stock price per share = Net income for s | NET INCOME/(LOSS) ATTRIBUTABLE TO FORD MOTOR COMPANY | ||||||||||||||
| common stock / average fully dilutes common shares | Income/(Loss) from continuing operations | 20,213 | 6,561 | 2,712 | |||||||||||
| 18 | RO Equity | ||||||||||||||
| Net income / 2 pt average equity | Income/(Loss) from discontinued operations | 5 | |||||||||||||
| 19 | Income statement & BS Vertical analysis | Net income/(loss) attributable to Ford Motor Company | 20,213 | 6,561 | 2,717 | ||||||||||
| For IS Sales OR revenue = 100% divide all by sales or revenue | |||||||||||||||
| For BS Assets = 100%, divide all by Assets | |||||||||||||||
| 20 | IS Horizontal analysis | ||||||||||||||
| Difference from prior [older] period / prior period | |||||||||||||||
| 21 | BV per common share | ||||||||||||||
| Equity / Average # fully diluted common shares | |||||||||||||||
| 22 | Working capital | ||||||||||||||
| Current assets - Current liabilities | |||||||||||||||
| TimeWarner [TWX] | VERTICAL ANALYSIS: COMMON | CBS [CBS] | |||||||||||||
| WITHOUT NON-RECURRING ITEMS | |||||||||||||||
| PERIOD ENDING | 9/30/20x1 | % | % | 9/30/20x1 | PERIOD ENDING | ||||||||||
| Cash And Cash Equivalents | 4,355,000 | 3.2% | 2.0% | 553,100 | Cash And Cash Equivalents | ||||||||||
| Net Receivables | 6,653,000 | 4.9% | 11.4% | 3,096,900 | Net Receivables | ||||||||||
| Inventory | 2,061,000 | 1.5% | 2.9% | 781,500 | Inventory | ||||||||||
| Other Current Assets | 1,623,000 | 1.2% | 2.9% | 786,300 | Other Current Assets | ||||||||||
| Total Current Assets | 14,692,000 | 10.7% | 19.2% | 5,217,800 | Total Current Assets | ||||||||||
| Long Term Investments | 1,907,000 | 1.4% | 0.0% | 0 | Long Term Investments | ||||||||||
| Property Plant and Equipment | 23,646,000 | 17.3% | 16.9% | 4,583,000 | Property Plant and Equipment | ||||||||||
| Goodwill | 42,450,000 | 31.0% | 32.7% | 8,897,100 | Goodwill | ||||||||||
| Intangible Assets | 52,120,000 | 38.1% | 25.7% | 6,980,800 | Intangible Assets | ||||||||||
| Other Assets | 1,913,000 | 1.4% | 5.5% | 1,495,000 | Other Assets | ||||||||||
| Deferred Long Term Asset Charges | - | - | Deferred Long Term Asset Charges | ||||||||||||
| Total Assets | 136,728,000 | 100.0% | 100.0% | 27,173,700 | Total Assets | ||||||||||
| Accounts Payable | 5,289,000 | 3.9% | 12.5% | 3,397,300 | Accounts Payable | ||||||||||
| Short/Current Long Term Debt | 125,000 | 0.1% | 0.1% | 15,800 | Short/Current Long Term Debt | ||||||||||
| Other Current Liabilities | 6,556,000 | 4.8% | 4.6% | 1,259,100 | Other Current Liabilities | ||||||||||
| Total Current Liabilities | 11,970,000 | 8.8% | 17.2% | 4,672,200 | Total Current Liabilities | ||||||||||
| Long Term Debt | 37,867,000 | 27.7% | 26.1% | 7,084,300 | Long Term Debt | ||||||||||
| Other Liabilities | 6,972,000 | 5.1% | 20.9% | 5,667,700 | Other Liabilities | ||||||||||
| Deferred Long Term Liability Charges | 15,159,000 | 11.1% | 2.1% | 573,400 | Deferred Long Term Liability Charges | ||||||||||
| Minority Interest | 4,524,000 | 3.3% | 0.0% | 2,600 | Minority Interest | ||||||||||
| Total Liabilities | 76,492,000 | 55.9% | 66.2% | 18,000,200 | Total Liabilities | ||||||||||
| Redeemable Preferred Stock | 300,000 | 0.2% | - | Redeemable Preferred Stock | |||||||||||
| Common Stock | 49,000 | 0.0% | 0.0% | 800 | Common Stock | ||||||||||
| Retained Earnings | -86,637,000 | -63.4% | -113.1% | -30,734,300 | Retained Earnings | ||||||||||
| Treasury Stock | -25,836,000 | -18.9% | -13.6% | -3,693,400 | Treasury Stock | ||||||||||
| Capital Surplus | 172,609,000 | 126.2% | 160.6% | 43,651,500 | Capital Surplus | ||||||||||
| Other Stockholder Equity | -249,000 | -0.2% | -0.2% | -51,100 | Other Stockholder Equity | ||||||||||
| Total Stockholder Equity | 59,936,000 | 43.8% | 33.8% | 9,173,500 | Total Stockholder Equity | ||||||||||
| Net Tangible Assets | ($34,634,000) | -25.3% | -24.7% | ($6,704,400) | Net Tangible Assets | ||||||||||
| PERIOD ENDING | 30-Sep-08 | 30-Sep-08 | PERIOD ENDING | ||||||||||||
| Total Revenue | 11,706,000 | 100.0% | 100.0% | 3,375,700 | Total Revenue | ||||||||||
| Cost of Revenue | 6,664,000 | 56.9% | 60.7% | 2,050,200 | Cost of Revenue | ||||||||||
| Gross Profit | 5,042,000 | 43.1% | 39.3% | 1,325,500 | Gross Profit | ||||||||||
| Selling General and Administrative | 2,419,000 | 20.7% | 20.2% | 680,800 | Selling General and Administrative | ||||||||||
| Others | 206,000 | 1.8% | 4.1% | 139,700 | Others | ||||||||||
| Total Operating Expenses | 2,625,000 | 22.4% | 24.3% | 820,500 | Total Operating Expenses | ||||||||||
| Operating Income or Loss | 2,417,000 | 20.6% | 15.0% | 505,000 | Operating Income or Loss | ||||||||||
| Total Other Income/Expenses Net | 104,000 | -34,900 | Total Other Income/Expenses Net | 14,123,100 | |||||||||||
| Earnings Before Interest And Taxes | 2,521,000 | 470,100 | Earnings Before Interest And Taxes | ||||||||||||
| Interest Expense | 623,000 | 5.3% | 4.0% | 134,800 | Interest Expense | ||||||||||
| Income Before Tax | 1,898,000 | 335,300 | Income Before Tax | ||||||||||||
| Income Tax Expense | 655,000 | 100,590 | Income Tax Expense | ||||||||||||
| Minority Interest [memo] | -96,000 | -500 | Minority Interest [memo] | ||||||||||||
| Net Income From Continuing Ops | 1,243,000 | 10.6% | 7.0% | 234,710 | Net Income From Continuing Ops | ||||||||||
| Discontinued Operations | 1,000 | 0.0% | 0 | Discontinued Operations | |||||||||||
| Net Income | 1,244,000 | 10.6% | 234,710 | Net Income | |||||||||||
| Net Income Applicable To Common Shares | $1,244,000 | 10.6% | 7.0% | $234,710 | Net Income Applicable To Common Shares | ||||||||||
| Horizontal Analysis -- See PPT slides | |||||||||||||||
| Horizontal Analysis | |||||||||||||||
| Use for Ratios in class | Sample company [1] | Use for Ratios in class | Sample company [2] | ||||||||||||
| FORD MOTOR COMPANY AND SUBSIDIARIES | Simplified | ||||||||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS | Class Company, Inc. | ||||||||||||||
| For the Years Ended December 31, 2xx3, 2xx2, and 2xx1 | [This is #2 data set from Cash Flow] | Balance Sheet as of | |||||||||||||
| (in millions, except per share amounts) | 12/31/2xx1 | 12/31/2xx2 | |||||||||||||
| 2xx3 | 2xx2 | 2xx1 | Assets: | ||||||||||||
| Revenues | Current Assets: | $s | $s | ||||||||||||
| Total revenues | 136,264 | 128,954 | 116,283 | Cash | 200,000 | 252,110 | |||||||||
| Accounts Receivable | 385,100 | 438,000 | |||||||||||||
| Costs and expenses | Prepaid Expenses | 33,000 | 29,000 | ||||||||||||
| CoGS | 113,345 | 104,451 | 98,866 | Inventory | 600,000 | 700,000 | |||||||||
| Selling, administrative and other expenses | 11,578 | 11,909 | 13,029 | Other Current Assets | 22,000 | 7,000 | |||||||||
| Operating Income | 11,341 | 12,594 | 4,388 | Total Current Assets: | 1,240,100 | 1,426,110 | |||||||||
| Interest expense | 4,431 | 6,152 | 6,790 | Plant Property & Equipment | 2,100,000 | 2,740,000 | |||||||||
| Cr. Balance | Less: Accum. Depreciation | 600,000 | 760,000 | ||||||||||||
| Financial Services provision for credit and insurance losses | (33) | (216) | 1,030 | Net Plant Property & Equipment | 1,500,000 | 1,980,000 | |||||||||
| Total costs and expenses | 129,321 | 122,296 | 119,715 | ||||||||||||
| Other Non-Current Assets: | |||||||||||||||
| Intangibles | 500,000 | 480,000 | |||||||||||||
| Automotive interest income and other non-operating income/(expense), | 825 | (362 | 5,284 | 77,403 | Deferred Loan Placement Costs | 30,000 | 30,000 | ||||||||
| Financial Services other income/(loss), net (Note 19) | 413 | 315 | 552 | 373 | Other Non-Current assets | 41,000 | 37,000 | ||||||||
| Equity in net income/(loss) of affiliated companies | 500 | 538 | 195 | 207.3 | Total Other Non-Current Assets | 571,000 | 547,000 | ||||||||
| Income/(Loss) before income taxes | 8,681 | 7,149 | 2,599 | Total Assets | 3,311,100 | 3,953,110 | |||||||||
| Provision for/(Benefit from) income taxes (Note 22) | (11,541) | 592 | (113) | Liabilities: | |||||||||||
| Current Portion of Long Term Debt | 260,000 | 290,000 | |||||||||||||
| Income/(Loss) from continuing operations | 20,222 | 6,557 | 2,712 | Accounts Payable | 720,000 | 760,000 | |||||||||
| Accrued Expenses | 50,000 | 40,000 | |||||||||||||
| Income/(Loss) from discontinued operations | — | — | 5 | Other Current Liabilities | 23,000 | 11,000 | |||||||||
| Total Current Liabilities | 1,053,000 | 1,101,000 | |||||||||||||
| Net income/(loss) | 20,222 | 6,557 | 2,717 | ||||||||||||
| all attributable to common | Non-Current Liabilities | ||||||||||||||
| Long Term Debt | 1,100,000 | 915,000 | |||||||||||||
| Deferred Income Taxes | 55,000 | 71,000 | |||||||||||||
| FORD MOTOR COMPANY AND SUBSIDIARIES | Other Non-current Liabilities | 3,000 | 5,000 | ||||||||||||
| SECTOR BALANCE SHEET | Total Non-Current Liabilities | 1,158,000 | 991,000 | 991,000 | 3,953,110 | ||||||||||
| (in millions) | |||||||||||||||
| ASSETS | December 31, | December 31 | Total Liabilities | 2,211,000 | 2,092,000 | ||||||||||
| Automotive & Fin initial services | 2xx3 | 2xx2 | |||||||||||||
| Cash and cash equivalents | 17,148 | 14,805 | Owners Equity | ||||||||||||
| Marketable securities (Note 6) | 18,819 | 20,966 | Common Stock @ par = $0.01 | 100 | 110 | ||||||||||
| Total cash and marketable securities | 35,967 | 35,771 | Cash for cash flow | Additional Paid-in Capital | 700,000 | 756,000 | |||||||||
| 41,656 | Dividends [before closing entries] | 49,000 | |||||||||||||
| Receivables, less allowances of $126 and $228 | 77,549 | 77,257 | 10,384 | Retained Earnings | 400,000 | 1,056,000 | 0.0408333333 | ||||||||
| Inventories (Note 10) | 5,901 | 5,917 | Total Owners' Equity | 1,100,100 | 1,861,110 | 1,480,605 | |||||||||
| Deferred income taxes | 1,791 | 359 | |||||||||||||
| Net investment in operating leases (Note 8) | 1,356 | 1,282 | Total Liabilities and Owners Equity | 3,311,100 | 3,953,110 | ||||||||||
| Other current assets | 1,053 | 610 | |||||||||||||
| Current receivable from Financial Services (Note 1) | 878 | 1,700 | Ending # of Common Shares | 1,057,000 | 1,200,000 | 0.0408333333 | |||||||||
| Total current assets | 124,495 | 122,896 | Check | 0 | 0 | ||||||||||
| Equity in net assets of affiliated companies (Note 11) | 2,797 | 2,441 | Note: in this example we have Intangibles - which is also a non-cash charge to income | ||||||||||||
| Net property (Note 14) | 22,229 | 23,027 | like depreciation - so we add that back to net income just like deprecation: | ||||||||||||
| Deferred income taxes | 13,932 | 2,468 | |||||||||||||
| Net intangible assets (Note 15) | 100 | 102 | |||||||||||||
| Non-current receivable from Financial Services (Note 1) | 32 | 181 | 1.76 | Class Company, Inc. | |||||||||||
| Net investment in operating leases (Note 8) | 11,482 | 10,393 | Statement of Income | ||||||||||||
| Equity in net assets of affiliated companies (Note 11) | 139 | 128 | Period Ending 12/31/2xx2 | ||||||||||||
| Other assets | 5,154 | 6,240 | $s | $s | |||||||||||
| Total Non-current assets | 55,865 | 44,980 | Revenue [all credit sales] | 7,000,000 | 100.0% | ||||||||||
| Intersector elimination | (1,112) | (2,083) | |||||||||||||
| Total assets | 179,248 | 165,793 | Cost of Goods Sold | 4,500,000 | 64.3% | ||||||||||
| LIABILITIES | Gross Profit | 2,500,000 | 35.7% | ||||||||||||
| Trade payables | 14,990 | 14,818 | 24233 | ||||||||||||
| Other payables | 2,734 | 1,544 | 179,248 | Operating Expenses: | 1,358,000 | 19.4% | |||||||||
| Accrued liabilities and deferred revenue (Note 16) | 15,003 | 17,065 | 20,222 | Operating Income | 1,142,000 | 16.3% | |||||||||
| Deferred income taxes | 40 | 392 | 4,431 | ||||||||||||
| Debt payable within one year (Note 18) | 1,943 | 3,930 | 0.7 | Other Income/Gain | 0 | 0.0% | |||||||||
| Total current liabilities | 32,825 | 34,516 | 3101.7 | ||||||||||||
| 23,324 | Provision for Income Taxes | 505,000 | 7.2% | ||||||||||||
| Non-current | 13.5% | ||||||||||||||
| Long-term debt (Note 18) | 98,656 | 102,140 | Operating Income | 1,142,000 | 16.3% | ||||||||||
| Other liabilities (Note 16) | 26,910 | 23,016 | |||||||||||||
| Deferred income taxes | 255 | 344 | Interest Expense | 142,000 | |||||||||||
| Other liabilities and deferred income | 38,558 | 41,137 | Other Income | 6,000 | 0.1% | ||||||||||
| Payable to Automotive (Note 1) | 910 | 1,881 | |||||||||||||
| Total Non-current | 165,289 | 168,518 | Income Before Taxes | 1,006,000 | 14.4% | ||||||||||
| Taxes | 350,000 | 5.0% | 34.8% | tax rate 350000 / 1006000 | |||||||||||
| Intersector elimination | (1,112) | (2,083) | |||||||||||||
| Total liabilities | 164,177 | 166,435 | Net Income | 656,000 | 9.4% | ||||||||||
| 0 | 0 | ||||||||||||||
| EQUITY | Tax rate = 40% | ||||||||||||||
| Capital stock (Note 24) | 2xx3 | 2xx2 | Class Company, Inc. | 0 | 0 | ||||||||||
| Common Stock, par value $.01 per share (3,745 million shares issued) | 37 | 37 | Number of Shares | OI % | 16.31% | 1 | |||||||||
| Class B Stock, par value $.01 per share (71 million shares issued) | 1 | 1 | 3.8 billion | NI % | 9.4% | 2 | |||||||||
| Capital in excess of par value of stock | 20,905 | 20,803 | GP $ | 2,500,000 | 3 | ||||||||||
| Retained earnings/(Accumulated deficit) | 12,985 | (7,038) | Dividends Ex.only | GP % | 35.7% | 4 | |||||||||
| Accumulated other comprehensive income/(loss) | (18,734) | (14,313) | $ 0.25 | WC $ | 325,110 | 5 | |||||||||
| Treasury stock | (166) | (163) | Current ratio | 1.30 | 6 | ||||||||||
| Total equity/(deficit) attributable to Ford Motor Company | 15,028 | (673) | Stock Price/share | Quick Ratio aka Acid test Ratio | 0.61 | 7 | |||||||||
| Equity/(Deficit) attributable to noncontrolling interests | 43 | 31 | $ 9.50 | A/R Turns | 17.01 | 8 | |||||||||
| Total equity/(deficit) | 15,071 | (642) | Credit Sales per day | 19178 | 9 | ||||||||||
| Total liabilities and equity | 179,248 | 165,793 | A/R turnover Days | 20.1 | 10 | ||||||||||
| Inventory turnover | 6.9 | 11 | |||||||||||||
| FORD MOTOR COMPANY AND SUBSIDIARIES | 2xx3 | Days of inventory = average sale period | 52.7 | 12 | |||||||||||
| 11341 / 136264 | OI % | 8.32% | 1 | Asset turnover | 1.93 | 13 | |||||||||
| 20222 / 136264 | NI % | 14.8% | 2 | Acctg. ROA [aka ROI] % | 18.1% | 14 | |||||||||
| 136264 - 113345 | GP $ | 22,919 | 3 | Return on Total Assets | 24.3% | 15 | Interest AT added | ||||||||
| [136264 - 113345 ] / 136264 | GP % | 16.8% | 4 | Return on Total Assets | 18.1% | 16 | No interest added | ||||||||
| 124495 - 32825 | WC $ | 91,670 | 5 | EPS [common share] | $0.58 | 17 | see PPT for Preferred stcok | ||||||||
| 124495 / 32825 | Current ratio | 3.79 | 6 | Times interest [expense] only | 8.04 | 18 | |||||||||
| Quick Ratio aka Acid test Ratio | 3.61 | 7 | [124495 - 5901]/32825 | ROE % | 44.3% | 19 | average equity | ||||||||
| A/R Turns | 1.76 | 8 | 136264/avge77257,77549 | PE Ratio | 17.20 | 20 | |||||||||
| Credit Sales per day | 373 | 9 | Dividend payout ratio | 7.0% | 21 | ||||||||||
| A/R turnover Days | 207.3 | 10 | 365 / AR turns | Dividend yield ratio | 0.4% | 22 | |||||||||
| Inventory turnover | 19.2 | 11 | 113345/avge5901,5917 | Return common equity | 44.3% | 23 | see PPT for Preferred stcok | ||||||||
| Days of inventory = average sale period | 19.0 | 12 | 365/19.2 | BV per share | $1.55 | 24 | |||||||||
| Asset turnover | 0.79 | 13 | 136264/avge179248,165793 | $10.00 | Market price per share | ||||||||||
| Acctg. ROA [aka ROI] % | 11.7% | 14 | Averages begin | Debt to equity ratio | 1.12 | 25 | |||||||||
| 20222/avge1792498,165793 | Debt to asset ratio | 0.53 | 26 | ||||||||||||
| Return on Total Assets [tax @30%] | 13.5% | 15 | Interest AT added | ||||||||||||
| Return on Total Assets | 11.7% | 16 | No interest added | ||||||||||||
| 20222/avge(179248,165793 | |||||||||||||||
| EPS [common share] | $5.32 | 17 | 20222/3800[avge] | ||||||||||||
| Times interest [expense] only | 2.56 | 18 | 11341/4431 | Example A | |||||||||||
| ROE % | 280.3% | 19 | 20222/av.15071,[642] | Net Income | $ 1,500,000 | ||||||||||
| PE Ratio | 1.79 | 20 | 9.50/5.32 | Preferred shares | 115,000 | ||||||||||
| Dividend payout ratio | 4.7% | 21 | .25/5.32 | Dividends per preferred share | $1.20 | ||||||||||
| Dividend yield ratio | 2.6% | 22 | .25/9.50 | Paid to preferred | $138,000 | ||||||||||
| Return common equity | 280.3% | 23 | Have only common in this ex. | 20,222 | Income for Common shares | $1,362,000 | |||||||||
| BV per share | $3.97 | 24 | 15071/3800 | 7,215 | Average # of Common shares | 950,000 | |||||||||
| $10.00 | Market price per share Sept'12 | EPS per common share | $1.43 | ||||||||||||
| Debt to equity ratio | 10.9 | 25 | 164177/15071 | ||||||||||||
| Debt to asset ratio | 0.92 | 26 | |||||||||||||
| Example B | |||||||||||||||
| Net Income | $ 2,770,000 | ||||||||||||||
| Preferred shares | 1,200,000 | ||||||||||||||
| Dividends per preferred share | $2.00 | ||||||||||||||
| Paid to preferred | $2,400,000 | ||||||||||||||
| Income for Common shares | $370,000 | ||||||||||||||
| Average # of Common shares | 1,300,000 | ||||||||||||||
| EPS per common share | $0.28 | ||||||||||||||
ACC220---HCT---&P of &N---&D,&T---&F,&A
Use student Ch.15 File
Ch.15 FinRatio-Trend
| ClassCo | TREND | |||||||||
| Year | ||||||||||
| Item | 2xx5 | 2xx4 | 2xx3 | 2xx2 | 2xx1 | |||||
| Sales | $ 400,000 | $ 355,000 | $ 320,000 | $ 290,000 | $ 275,000 | |||||
| Cost of goods sold | 285,000 | 250,000 | 225,000 | 198,000 | 190,000 | |||||
| Gross margin | 115,000 | 105,000 | 95,000 | 92,000 | 85,000 | |||||
| Year | ||||||||||
| Item | 2xx5 | 2xx4 | 2xx3 | 2xx2 | 2xx1 | |||||
| Sales | 145.5% | 129.1% | 116.4% | 105.5% | 100.0% | |||||
| Cost of goods sold | 150.0% | 131.6% | 118.4% | 104.2% | 100.0% | |||||
| Gross margin | 135.3% | 123.5% | 111.8% | 108.2% | 100.0% | |||||
| See Separate File | ||||||||||
| 1.1267605634 |
HCT---&P of &N---&D,&T---&F,&A
By analyzing the trends for ClassCO, we can see that cost of goods sold is increasing faster than sales, which is slowing the increase in gross margin.
Sales 2xx5 2xx4 2xx3 2xx2 2xx1 1.4545454545454546 1.290909090909091 1.1636363636363636 1.0545454545454545 1 Cost of goods sold 2xx5 2xx4 2xx3 2xx2 2xx1 1.5 1.3157894736842106 1.1842105263157894 1.0421052631578946 1 Gross margin 2xx5 2xx4 2xx3 2xx2 2xx1 1.35294117 64705883 1.2352941176470589 1.1176470588235294 1.0823529411764705 1Trend lines shown with option of two forward periods; option to display Y=a+bX formula as well and least squares coefficient
Use student Ch.15 File
Ch.15 HW helper
| Ratio Definitions [1] | Ch. 15 Financial Ratios | FORD MOTOR COMPANY AND SUBSIDIARIES | |||||||||||||
| these ar ratios for HW | CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||
| PE = Period End | For the Years Ended December 31, 2011, 2010, and 2009 | ||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| 1 | Current ratio | ||||||||||||||
| PE Current assets / Current liabilities | |||||||||||||||
| 2011 | 2010 | 2009 | |||||||||||||
| 2 | Quick Ratio | ||||||||||||||
| PE Cash + Marketable securities + Short term investment + A/R / Current liabilities | Revenues | ||||||||||||||
| Total revenues | 136,264 | 128,954 | 116,283 | ||||||||||||
| 3 | Average collection period [days] | ||||||||||||||
| 365 X [ 2 pt average A/R / Net credit sales] | Costs and expenses | ||||||||||||||
| CoGS | 113,345 | 104,451 | 98,866 | ||||||||||||
| OR 365 / A/R turnover | |||||||||||||||
| Selling, administrative and other expenses | 11,578 | 11,909 | 13,029 | ||||||||||||
| 5 | A/R turnover [ assume all sales are credit sales] | ||||||||||||||
| Net Credit Sales (or Revenue) / 2 pt. average A/R | Interest expense | 4,431 | 6,152 | 6,790 | |||||||||||
| Note: if unknown assume all line sales, revenue are credit | |||||||||||||||
| 6 | Inventory turnover | Financial Services provision for credit and insurance losses | -33 | -216 | 1,030 | ||||||||||
| Net Credit Sales (or Revenue) / 2 pt. average A/R | Total costs and expenses | 129,321 | 122,296 | 119,715 | |||||||||||
| 7 | Inventory days | ||||||||||||||
| 365 / Inventory turnover | Automotive interest income and other non-operating income/(expense), | 825 | (362 | 5,284 | |||||||||||
| 8 | Fixed asset turnover | Financial Services other income/(loss), net (Note 19) | 413 | 315 | 552 | ||||||||||
| Net sales or revenue / Net Fxd. Assets | Equity in net income/(loss) of affiliated companies | 500 | 538 | 195 | |||||||||||
| 9 | Debt ratio | Income/(Loss) before income taxes | 8,681 | 7,149 | 2,599 | ||||||||||
| Total assets / Total liabilities | |||||||||||||||
| Provision for/(Benefit from) income taxes (Note 22) | -11541 | 592 | -113 | ||||||||||||
| 10 | Debt to equity | ||||||||||||||
| Total liabilities / Total equity | Income/(Loss) from continuing operations | 20,222 | 6,557 | 2,712 | |||||||||||
| 11 | Times interest earned | Ratio Definitions [2] | Income/(Loss) from discontinued operations | — | — | 5 | |||||||||
| Net income before interest & taxes / [Interest expense - interest income] | |||||||||||||||
| this = net interest expense | Net income/(loss) | 20,222 | 6,557 | 2,717 | |||||||||||
| 12 | Gross Profit % | ||||||||||||||
| [Revenue - CoGS] / Net sales, revenue | Less: Income/(Loss) attributable to noncontrolling interests | 9 | (4 | — | |||||||||||
| 13 | Operating income % | Net income/(loss) attributable to Ford Motor Company | $ | $ | $ | ||||||||||
| Operating income / Sales or revenue | |||||||||||||||
| 14 | Net income % | NET INCOME/(LOSS) ATTRIBUTABLE TO FORD MOTOR COMPANY | |||||||||||||
| Net income [bottom line] / net sales or revenue | Income/(Loss) from continuing operations | $ | $ | $ | |||||||||||
| 15 | Return on assets [ROI] | Net income/(loss) attributable to Ford Motor Company | $ | $ | $ | ||||||||||
| Net income / 2 pt. average total assets | |||||||||||||||
| Less: Income/(Loss) attributable to noncontrolling interests | 9 | -4 | |||||||||||||
| 16 | PE ratio | ||||||||||||||
| Net income per share / stock price per share | Net income/(loss) attributable to Ford Motor Company | 20,213 | 6,561 | 2,717 | |||||||||||
| 17 | Earnings per share [undiluted] | ||||||||||||||
| Stock price per share = Net income for s | NET INCOME/(LOSS) ATTRIBUTABLE TO FORD MOTOR COMPANY | ||||||||||||||
| common stock / average fully dilutes common shares | Income/(Loss) from continuing operations | 20,213 | 6,561 | 2,712 | |||||||||||
| 18 | RO Equity | ||||||||||||||
| Net income / 2 pt average equity | Income/(Loss) from discontinued operations | 5 | |||||||||||||
| 19 | Income statement & BS Vertical analysis | Net income/(loss) attributable to Ford Motor Company | 20,213 | 6,561 | 2,717 | ||||||||||
| For IS Sales OR revenue = 100% divide all by sales or revenue | |||||||||||||||
| For BS Assets = 100%, divide all by Assets | |||||||||||||||
| 20 | IS Horizontal analysis | ||||||||||||||
| Difference from prior [older] period / prior period | |||||||||||||||
| 21 | BV per common share | ||||||||||||||
| Equity / Average # fully diluted common shares | |||||||||||||||
| 22 | Working capital | ||||||||||||||
| Current assets - Current liabilities | |||||||||||||||
| TimeWarner [TWX] | VERTICAL ANALYSIS: COMMON | CBS [CBS] | |||||||||||||
| WITHOUT NON-RECURRING ITEMS | |||||||||||||||
| PERIOD ENDING | 9/30/20x1 | % | % | 9/30/20x1 | PERIOD ENDING | ||||||||||
| Cash And Cash Equivalents | 4,355,000 | 3.2% | 2.0% | 553,100 | Cash And Cash Equivalents | ||||||||||
| Net Receivables | 6,653,000 | 4.9% | 11.4% | 3,096,900 | Net Receivables | ||||||||||
| Inventory | 2,061,000 | 1.5% | 2.9% | 781,500 | Inventory | ||||||||||
| Other Current Assets | 1,623,000 | 1.2% | 2.9% | 786,300 | Other Current Assets | ||||||||||
| Total Current Assets | 14,692,000 | 10.7% | 19.2% | 5,217,800 | Total Current Assets | ||||||||||
| Long Term Investments | 1,907,000 | 1.4% | 0.0% | 0 | Long Term Investments | ||||||||||
| Property Plant and Equipment | 23,646,000 | 17.3% | 16.9% | 4,583,000 | Property Plant and Equipment | ||||||||||
| Goodwill | 42,450,000 | 31.0% | 32.7% | 8,897,100 | Goodwill | ||||||||||
| Intangible Assets | 52,120,000 | 38.1% | 25.7% | 6,980,800 | Intangible Assets | ||||||||||
| Other Assets | 1,913,000 | 1.4% | 5.5% | 1,495,000 | Other Assets | ||||||||||
| Deferred Long Term Asset Charges | - | - | Deferred Long Term Asset Charges | ||||||||||||
| Total Assets | 136,728,000 | 100.0% | 100.0% | 27,173,700 | Total Assets | ||||||||||
| Accounts Payable | 5,289,000 | 3.9% | 12.5% | 3,397,300 | Accounts Payable | ||||||||||
| Short/Current Long Term Debt | 125,000 | 0.1% | 0.1% | 15,800 | Short/Current Long Term Debt | ||||||||||
| Other Current Liabilities | 6,556,000 | 4.8% | 4.6% | 1,259,100 | Other Current Liabilities | ||||||||||
| Total Current Liabilities | 11,970,000 | 8.8% | 17.2% | 4,672,200 | Total Current Liabilities | ||||||||||
| Long Term Debt | 37,867,000 | 27.7% | 26.1% | 7,084,300 | Long Term Debt | ||||||||||
| Other Liabilities | 6,972,000 | 5.1% | 20.9% | 5,667,700 | Other Liabilities | ||||||||||
| Deferred Long Term Liability Charges | 15,159,000 | 11.1% | 2.1% | 573,400 | Deferred Long Term Liability Charges | ||||||||||
| Minority Interest | 4,524,000 | 3.3% | 0.0% | 2,600 | Minority Interest | ||||||||||
| Total Liabilities | 76,492,000 | 55.9% | 66.2% | 18,000,200 | Total Liabilities | ||||||||||
| Redeemable Preferred Stock | 300,000 | 0.2% | - | Redeemable Preferred Stock | |||||||||||
| Common Stock | 49,000 | 0.0% | 0.0% | 800 | Common Stock | ||||||||||
| Retained Earnings | -86,637,000 | -63.4% | -113.1% | -30,734,300 | Retained Earnings | ||||||||||
| Treasury Stock | -25,836,000 | -18.9% | -13.6% | -3,693,400 | Treasury Stock | ||||||||||
| Capital Surplus | 172,609,000 | 126.2% | 160.6% | 43,651,500 | Capital Surplus | ||||||||||
| Other Stockholder Equity | -249,000 | -0.2% | -0.2% | -51,100 | Other Stockholder Equity | ||||||||||
| Total Stockholder Equity | 59,936,000 | 43.8% | 33.8% | 9,173,500 | Total Stockholder Equity | ||||||||||
| Net Tangible Assets | ($34,634,000) | -25.3% | -24.7% | ($6,704,400) | Net Tangible Assets | ||||||||||
| PERIOD ENDING | 30-Sep-08 | 30-Sep-08 | PERIOD ENDING | ||||||||||||
| Total Revenue | 11,706,000 | 100.0% | 100.0% | 3,375,700 | Total Revenue | ||||||||||
| Cost of Revenue | 6,664,000 | 56.9% | 60.7% | 2,050,200 | Cost of Revenue | ||||||||||
| Gross Profit | 5,042,000 | 43.1% | 39.3% | 1,325,500 | Gross Profit | ||||||||||
| Selling General and Administrative | 2,419,000 | 20.7% | 20.2% | 680,800 | Selling General and Administrative | ||||||||||
| Others | 206,000 | 1.8% | 4.1% | 139,700 | Others | ||||||||||
| Total Operating Expenses | 2,625,000 | 22.4% | 24.3% | 820,500 | Total Operating Expenses | ||||||||||
| Operating Income or Loss | 2,417,000 | 20.6% | 15.0% | 505,000 | Operating Income or Loss | ||||||||||
| Total Other Income/Expenses Net | 104,000 | -34,900 | Total Other Income/Expenses Net | 14,123,100 | |||||||||||
| Earnings Before Interest And Taxes | 2,521,000 | 470,100 | Earnings Before Interest And Taxes | ||||||||||||
| Interest Expense | 623,000 | 5.3% | 4.0% | 134,800 | Interest Expense | ||||||||||
| Income Before Tax | 1,898,000 | 335,300 | Income Before Tax | ||||||||||||
| Income Tax Expense | 655,000 | 100,590 | Income Tax Expense | ||||||||||||
| Minority Interest [memo] | -96,000 | -500 | Minority Interest [memo] | ||||||||||||
| Net Income From Continuing Ops | 1,243,000 | 10.6% | 7.0% | 234,710 | Net Income From Continuing Ops | ||||||||||
| Discontinued Operations | 1,000 | 0.0% | 0 | Discontinued Operations | |||||||||||
| Net Income | 1,244,000 | 10.6% | 234,710 | Net Income | |||||||||||
| Net Income Applicable To Common Shares | $1,244,000 | 10.6% | 7.0% | $234,710 | Net Income Applicable To Common Shares | ||||||||||
| Horizontal Analysis -- See PPT slides | |||||||||||||||
| Horizontal Analysis | |||||||||||||||
| Use for Ratios in class | Sample company Hand-out | ||||||||||||||
| FORD MOTOR COMPANY AND SUBSIDIARIES | Simplified | ||||||||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||
| For the Years Ended December 31, 2011, 2010, and 2009 | |||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| 2011 | 2010 | 2009 | |||||||||||||
| Revenues | |||||||||||||||
| Total revenues | 136,264 | 128,954 | 116,283 | ||||||||||||
| Costs and expenses | Total revenues | ||||||||||||||
| CoGS | 113,345 | 104,451 | 98,866 | - | |||||||||||
| Selling, administrative and other expenses | 11,578 | 11,909 | 13,029 | ||||||||||||
| Operating Income | 11,341 | 12,594 | 4,388 | ||||||||||||
| Interest expense | 4,431 | 6,152 | 6,790 | ||||||||||||
| Financial Services provision for credit and insurance losses | (33) | (216) | 1,030 | ||||||||||||
| Total costs and expenses | 129,321 | 122,296 | 119,715 | ||||||||||||
| Automotive interest income and other non-operating income/(expense), | 825 | (362 | 5,284 | ||||||||||||
| Financial Services other income/(loss), net (Note 19) | 413 | 315 | 552 | ||||||||||||
| Equity in net income/(loss) of affiliated companies | 500 | 538 | 195 | ||||||||||||
| Income/(Loss) before income taxes | 8,681 | 7,149 | 2,599 | ||||||||||||
| 20,222 | |||||||||||||||
| Provision for/(Benefit from) income taxes (Note 22) | (11,541) | 592 | (113) | 40% | |||||||||||
| 4,431 | |||||||||||||||
| Income/(Loss) from continuing operations | 20,222 | 6,557 | 2,712 | 2658.6 | |||||||||||
| 22,881 | |||||||||||||||
| Income/(Loss) from discontinued operations | — | — | 5 | ||||||||||||
| Net income/(loss) | 20,222 | 6,557 | 2,717 | ||||||||||||
| all atributable to common | |||||||||||||||
| FORD MOTOR COMPANY AND SUBSIDIARIES | |||||||||||||||
| SECTOR BALANCE SHEET | |||||||||||||||
| (in millions) | |||||||||||||||
| ASSETS | December 31, | December 31, | |||||||||||||
| Automotive & Fin incial services | 2011 | 2010 | |||||||||||||
| Cash and cash equivalents | 17,148 | 14,805 | |||||||||||||
| Marketable securities (Note 6) | 18,819 | 20,966 | |||||||||||||
| Total cash and marketable securities | 35,967 | 35,771 | Cash for cash flow | ||||||||||||
| Receivables, less allowances of $126 and $228 | 77,549 | 77,257 | |||||||||||||
| Inventories (Note 10) | 5,901 | 5,917 | |||||||||||||
| Deferred income taxes | 1,791 | 359 | |||||||||||||
| Net investment in operating leases (Note 8) | 1,356 | 1,282 | |||||||||||||
| Other current assets | 1,053 | 610 | |||||||||||||
| Current receivable from Financial Services (Note 1) | 878 | 1,700 | |||||||||||||
| Total current assets | 124,495 | 122,896 | |||||||||||||
| Equity in net assets of affiliated companies (Note 11) | 2,797 | 2,441 | |||||||||||||
| Net property (Note 14) | 22,229 | 23,027 | |||||||||||||
| Deferred income taxes | 13,932 | 2,468 | |||||||||||||
| Net intangible assets (Note 15) | 100 | 102 | |||||||||||||
| Non-current receivable from Financial Services (Note 1) | 32 | 181 | |||||||||||||
| Net investment in operating leases (Note 8) | 11,482 | 10,393 | |||||||||||||
| Equity in net assets of affiliated companies (Note 11) | 139 | 128 | |||||||||||||
| Other assets | 5,154 | 6,240 | |||||||||||||
| Total Non-current assets | 55,865 | 44,980 | |||||||||||||
| Intersector elimination | (1,112) | (2,083) | |||||||||||||
| Total assets | 179,248 | 165,793 | |||||||||||||
| LIABILITIES | |||||||||||||||
| Trade payables | 14,990 | 14,818 | |||||||||||||
| Other payables | 2,734 | 1,544 | |||||||||||||
| Accrued liabilities and deferred revenue (Note 16) | 15,003 | 17,065 | |||||||||||||
| Deferred income taxes | 40 | 392 | |||||||||||||
| Debt payable within one year (Note 18) | 1,943 | 3,930 | |||||||||||||
| Total current liabilities | 32,825 | 34,516 | |||||||||||||
| Non-current | |||||||||||||||
| Long-term debt (Note 18) | 98,656 | 102,140 | |||||||||||||
| Other liabilities (Note 16) | 26,910 | 23,016 | |||||||||||||
| Deferred income taxes | 255 | 344 | |||||||||||||
| Other liabilities and deferred income | 38,558 | 41,137 | |||||||||||||
| Payable to Automotive (Note 1) | 910 | 1,881 | |||||||||||||
| Total Non-current | 165,289 | 168,518 | |||||||||||||
| Intersector elimination | (1,112) | (2,083) | |||||||||||||
| Total liabilities | 164,177 | 166,435 | |||||||||||||
| 0 | 0 | ||||||||||||||
| EQUITY | Tax rate = 40% | ||||||||||||||
| Capital stock (Note 24) | 2011 | 2010 | |||||||||||||
| Common Stock, par value $.01 per share (3,745 million shares issued) | 37 | 37 | Number of Shares | ||||||||||||
| Class B Stock, par value $.01 per share (71 million shares issued) | 1 | 1 | 3.8 billion | ||||||||||||
| Capital in excess of par value of stock | 20,905 | 20,803 | |||||||||||||
| Retained earnings/(Accumulated deficit) | 12,985 | (7,038) | Dividends Ex.only | ||||||||||||
| Accumulated other comprehensive income/(loss) | (18,734) | (14,313) | $ 0.25 | ||||||||||||
| Treasury stock | (166) | (163) | 35,680,000,000.00 | ||||||||||||
| Total equity/(deficit) attributable to Ford Motor Company | 15,028 | (673) | Stock Price/share | 9.35 | |||||||||||
| Equity/(Deficit) attributable to noncontrolling interests | 43 | 31 | $ 9.50 | 3,816,042,781 | |||||||||||
| Total equity/(deficit) | 15,071 | (642) | |||||||||||||
| Total liabilities and equity | 179,248 | 165,793 | |||||||||||||
| FORD MOTOR COMPANY AND SUBSIDIARIES | 2011 | ||||||||||||||
| OI % | 8.32% | 1 | |||||||||||||
| NI % | 14.8% | 2 | |||||||||||||
| GP $ | 22,919 | 3 | |||||||||||||
| GP % | 16.8% | 4 | |||||||||||||
| WC $ | 91,670 | 5 | |||||||||||||
| Current ratio | 3.79 | 6 | |||||||||||||
| Quick Ratio aka Acid test Ratio | 3.46 | 7 | |||||||||||||
| A/R Turns | 1.76 | 8 | |||||||||||||
| Credit Sales per day | 373 | 9 | |||||||||||||
| A/R turnover | 207.3 | 10 | |||||||||||||
| Inventory turnover | 19.2 | 11 | |||||||||||||
| Days of inventory = average sale period | 19.0 | 12 | |||||||||||||
| Aset turnover | 0.76 | 13 | |||||||||||||
| Acctg. ROA [aka ROI] % | 11.7% | 14 | |||||||||||||
| Return on Total Assets | 13.3% | 20 | |||||||||||||
| EPS | $5.32 | 15 | |||||||||||||
| Times interest [expense] only | 2.56 | 16 | |||||||||||||
| ROE % | 280.3% | 17 | |||||||||||||
| PE Ratio | 1.79 | 18 | |||||||||||||
| Dividen payout ratio | 4.7% | 19 | |||||||||||||
| Dividend yieldt ratio | 2.6% | ||||||||||||||
| Return common equiy | 280.3% | 21 | Have only common in this ex. | ||||||||||||
| BV per share | $3.97 | 22 | |||||||||||||
| Debt to equity ratio | 10.9 | 23 | |||||||||||||
| Debt to asset ratio | 0.92 | 24 | |||||||||||||
HCT---&P of &N---&D,&T---&F,&A
Use student Ch.15 File
Ch.12
| Excel 1 | ||||||||||||||
| Segment Income Statement 12/31/2xx1 | ||||||||||||||
| Digital Watches | ||||||||||||||
| Sales | $ 500,000 | |||||||||||||
| Less: variable expenses | ||||||||||||||
| Variable manufacturing costs | $ 120,000 | |||||||||||||
| Variable shipping costs | 5,000 | |||||||||||||
| Commissions | 75,000 | 200,000 | ||||||||||||
| Contribution margin | $ 300,000 | |||||||||||||
| Less: Fixed Costs & Expenses | 1 | |||||||||||||
| General factory overhead | $ 60,000 | |||||||||||||
| Salary of line manager | 90,000 | |||||||||||||
| Depreciation of equipment | 50,000 | |||||||||||||
| Advertising - direct | 100,000 | |||||||||||||
| Rent - factory space | 70,000 | |||||||||||||
| General admin. expenses | 30,000 | 400,000 | ||||||||||||
| Net Operating Profit/(Loss) | $ (100,000) | |||||||||||||
| Excel 2 | Elimination | |||||||||||||
| +/- benefit | ||||||||||||||
| Sales | $ 500,000 | |||||||||||||
| Less: variable expenses | (200,000) | |||||||||||||
| Contribution margin | $ (300,000) | |||||||||||||
| 1.Can reduce Factory Rental Space = $70,000 | ||||||||||||||
| Reduced "Fixed" Expense | 2.Eliminate Advertising on dropped watch = $100,000 | |||||||||||||
| Factory rent | $70,000 | 3.Line Supervision Eliminated = $90,000 | ||||||||||||
| Advertising | $100,000 | |||||||||||||
| Line Supervision | $90,000 | $260,000 | ||||||||||||
| Eliminate Wacth Net effect | ($40,000) | |||||||||||||
| Reduced Operating Income | ||||||||||||||
| Keep Digital Watch | ||||||||||||||
| Excel 2 | ||||||||||||||
| Comparative approach | ||||||||||||||
| With & Without digital Watch Segment | ||||||||||||||
| Keep watch | ||||||||||||||
| With | Without | +/- benefit | ||||||||||||
| Watch | Watch | Difference | ||||||||||||
| Sales | $500,000 | $0 | ||||||||||||
| Less: variable expenses | ||||||||||||||
| Variable manufacturing costs | $120,000 | $0 | ||||||||||||
| Variable shipping costs | $5,000 | $0 | ||||||||||||
| Commissions | $75,000 | $0 | ||||||||||||
| Total Variable costs & expenses | $200,000 | $0 | ||||||||||||
| Contribution margin | $300,000 | $0 | $300,000 | |||||||||||
| Less: Fixed Costs & Expenses | ||||||||||||||
| General factory overhead | $60,000 | $60,000 | $0 | |||||||||||
| Salary of line manager | $90,000 | $0 | ($90,000) | |||||||||||
| Depreciation of equipment | $50,000 | $50,000 | $0 | |||||||||||
| Advertising - direct | $100,000 | $0 | ($100,000) | |||||||||||
| Rent - factory space | $70,000 | $0 | ($70,000) | |||||||||||
| General admin. expenses | $30,000 | $30,000 | $0 | |||||||||||
| Total Fixed Costs & Expenses | $400,000 | $140,000 | ($260,000) | |||||||||||
| Net Operating Profit/(Loss) | $ (100,000) | $ (140,000) | $40,000 | |||||||||||
| Keep Digital Watch | ||||||||||||||
| Excel 3 | ||||||||||||||
| Avoided in Outsourced | ||||||||||||||
| Make in House costs | Variable costs | |||||||||||||
| Direct materials | $9.00 | $9.00 | ||||||||||||
| Direct labor | $5.00 | $5.00 | ||||||||||||
| Variable overhead | $1.00 | $1.00 | ||||||||||||
| Depreciation of special equip. | $3.00 | No savings if poutsourced | ||||||||||||
| Supervisor's salary | $2.00 | $2.00 | ||||||||||||
| General factory overhead | $10.00 | No savings if poutsourced | ||||||||||||
| Unit product cost | $30.00 | $17.00 | Avoidable:Saved if outsourced | |||||||||||
| Excel 4 | ||||||||||||||
| OUTSOURCE | ||||||||||||||
| Resale Value of 4A existing equipment | $0.00 | |||||||||||||
| Fixed Costs elimintaed with outsource | $0.00 | |||||||||||||
| Outsource cost per unit | $25.00 | |||||||||||||
| Outsource cost per unit | $25.00 | |||||||||||||
| Avoidable:Saved if outsourced | $17.00 | Avoidable Costs | ||||||||||||
| Net added cost per unit if otsourced | ($8.00) | |||||||||||||
| Qty | 20,000 | ($160,000) | ||||||||||||
| Net added total costs if Outsourced | ||||||||||||||
| In-house | In-house | Outsource | ||||||||||||
| Comparative Total | per unit | Mfg. | $25.00 | |||||||||||
| Direct materials | $9.00 | $180,000 | 500,000 | |||||||||||
| Direct labor | $5.00 | $100,000 | ||||||||||||
| Variable overhead | $1.00 | $20,000 | ||||||||||||
| Depreciation of special equip. | $3.00 | |||||||||||||
| Supervisor's salary | $2.00 | $40,000 | ||||||||||||
| General factory overhead | $10.00 | |||||||||||||
| $340,000 | $500,000 | |||||||||||||
| $160,000 | ||||||||||||||
| Outsouce increased costs | ||||||||||||||
The avoidable costs associated with making part 4A include direct materials, direct labor, variable overhead, and the supervisor’s salary.
Ch.13 NO NO
| Cost of Capital | PE on | ||||||||
| Additional | Future | ||||||||
| $billion | Interst rate | PE now | earnings | ||||||
| Debt | 50 | 8% | |||||||
| Market cap | 150 | 18 | 14.5 | ||||||
| 5.6% | 6.9% | ||||||||
| PRETAX basis | 11.1% | ||||||||
| Pre tax basis | |||||||||
| Cost of capital | 10.3% | ||||||||
| Hurdle Rate | 15% | 70% average cost of capital/ 30% negative | |||||||
| Risk factors vary: productivity project risk may be lower than new product risk | |||||||||
| Hurdle rate: | 10% | ||||||||
| If WC now | |||||||||
| Equipment | WC | Profit | Net Cash Flow | PV by Year | |||||
| 0 | $ (160,000) | $ (100,000) | $ (260,000) | $ (260,000) | |||||
| 1 | $ 80,000 | $ 80,000 | $ 72,727 | ||||||
| 2 | $ 80,000 | $ 80,000 | $ 66,116 | ||||||
| 3 | $ (30,000) | $ 80,000 | $ 50,000 | $ 37,566 | |||||
| 4 | $ 80,000 | $ 80,000 | $ 54,641 | ||||||
| 5 | $ 5,000 | $ 100,000 | $ 80,000 | $ 185,000 | $ 114,870 | $ 85,920 | |||
| $ 85,920 | =+E21+NPV(F18,E22:E26) | ||||||||
| 21% | "=+IRR(E21:E26,0.1) | ||||||||
| Year | $ | PV$ | |||||||
| 0 | $ (3,170.00) | $ (3,170.00) | |||||||
| 1 | $ 1,000.00 | $ 909.09 | |||||||
| 2 | $ 1,000.00 | $ 826.45 | |||||||
| 3 | $ 1,000.00 | $ 751.31 | |||||||
| Project Life: | 4 | years | 4 | $ 1,000.00 | $ 683.01 | ||||
| Eqpmnt cost | $ 250,000 | ($0.12) | $ (0.13) | ||||||
| Maintenace | 2 | end 2 yrs. | |||||||
| Salvage | $ 10,000 | ||||||||
| Working Capital | $ 20,000 | ||||||||
| Cash flow | $ 120,000 | per year assumed AT | |||||||
| Hurdle Rate | 14% | ||||||||
| Cash flow per year | Inflow | Working | Net | ||||||
| Outflow | Annual | Salvage | Capital | Cash Flow | |||||
| 0 | $ (250,000) | $ (20,000) | $ (270,000) | ||||||
| 1 | $ 120,000 | $ 120,000 | |||||||
| 2 | $ (90,000) | $ 120,000 | $ 30,000 | ||||||
| 3 | $ 120,000 | $ 120,000 | |||||||
| 4 | $ 120,000 | $ 10,000 | $ 20,000 | $ 150,000 | |||||
| NPV @ Hurdle Rate | $ 28,156 | =+F49+NPV(B45,F50:F53) | $ 150,000 | ||||||
| IRR | 19% | =+IRR(F17:F21,0.16) | |||||||
| Year | 0 | $ (104,320) | |||||||
| 1 | $ 20,000 | ||||||||
| 2 | $ 20,000 | ||||||||
| 3 | $ 20,000 | ||||||||
| 4 | $ 20,000 | ||||||||
| 5 | $ 20,000 | ||||||||
| 6 | $ 20,000 | ||||||||
| 7 | $ 20,000 | ||||||||
| 8 | $ 20,000 | ||||||||
| 9 | $ 20,000 | ||||||||
| 10 | $ 20,000 | ||||||||
| IRR | 14.0% | =+IRR(C41:C51) | |||||||
| Year | 0 | $ (79,310) | |||||||
| 1 | $ 22,000 | ||||||||
| 2 | $ 22,000 | ||||||||
| 3 | $ 22,000 | ||||||||
| 4 | $ 22,000 | ||||||||
| 5 | $ 22,000 | ||||||||
| IRR | 12.0% | =+IRR(C66:C71) | |||||||
| Discount Rate | 10% | OLD | NEW | New - Old | |||||
| Term/years | 10 | 10 | ∆ Cash flow | ∆ Cash flow | |||||
| Year | 0 | -175000 | -260000 | -$300K+$40K | -85000 | $ (85,000) | |||
| 1 | 45000 | 60000 | 15000 | $ 13,636 | |||||
| 2 | 45000 | 60000 | 15000 | $ 12,397 | |||||
| 3 | 45000 | 60000 | 15000 | $ 11,270 | |||||
| 4 | 45000 | 60000 | 15000 | $ 10,245 | |||||
| 5 | 45000 | 60000 | 15000 | $ 9,314 | |||||
| 6 | -35000 | 10000 | replace brushes | 45000 | $ 25,401 | ||||
| 7 | 45000 | 60000 | 15000 | $ 7,697 | |||||
| 8 | 45000 | 60000 | 15000 | $ 6,998 | |||||
| 9 | 45000 | 60000 | 15000 | $ 6,361 | |||||
| 10 | 45000 | 67000 | +$50k + $7k | 22000 | $ 8,482 | ||||
| IRR | 17.6% | 17.2% | 16.4% | ||||||
| NPV | $56,348 | $83,149 | $26,802 | $26,802 | $ 26,802 | ||||
| Profitability Index | 32.2% | 32.0% | NPV/Initial investment | 31.5% | |||||
| A - B | |||||||||
| Rate | 14% | A | B | ∆ | ∆ NPV | ||||
| 0 | $ (80,000) | $ (60,000) | $ (20,000) | $ (20,000) | |||||
| 1 | $ 20,000 | $ 16,000 | $ 4,000 | $ 3,509 | |||||
| 2 | $ 20,000 | $ 16,000 | $ 4,000 | $ 3,078 | |||||
| 3 | $ 20,000 | $ 16,000 | $ 4,000 | $ 2,700 | |||||
| 4 | $ 20,000 | $ 16,000 | $ 4,000 | $ 2,368 | |||||
| 5 | $ 30,000 | $ 24,000 | $ 6,000 | $ 3,116 | |||||
| IRR | 10.9% | 13.4% | |||||||
| NPV | ($6,145) | ($916) | ($5,229) | $ (5,229) | |||||
| Profitability Index | -7.7% | -1.5% | NPV/Initial investment | ||||||
| Old | New | ∆ NPV | |||||||
| Rate | 10% | Old | New | ∆ | PV/year | PV/year | PV/year | ||
| 0 | $ (4,500) | $ (12,000) | $ 7,500 | $ (4,500) | $ (12,000) | $ 7,500 | |||
| 1 | $ (10,000) | $ (6,000) | $ (4,000) | $ (9,091) | $ (5,455) | $ (3,636) | |||
| 2 | $ (10,000) | $ (6,000) | $ (4,000) | $ (8,264) | $ (4,959) | $ (3,306) | |||
| 3 | $ (10,000) | $ (6,000) | $ (4,000) | $ (7,513) | $ (4,508) | $ (3,005) | |||
| 4 | $ (10,000) | $ (6,000) | $ (4,000) | $ (6,830) | $ (4,098) | $ (2,732) | |||
| 5 | $ (9,750) | $ (3,000) | $ (6,750) | $ (6,054) | $ (1,863) | $ (4,191) | |||
| NPV | ($42,253) | ($32,882) | ($9,371) | $ (42,253) | $ (32,882) | $ (9,371) | |||
| ($1,464.78) | -17577.3040858818 | ||||||||
| ($70,309) | |||||||||
| PV$ | PV$ | ||||||||
| Year | Tangible | Intangible | Total | PV$ | Tangible | Intangible | |||
| 0 | $ (100,000) | $ - 0 | $ (100,000) | "=+PMT(0.14,4,E200) | $ (100,000) | ||||
| 1 | $ 10,000 | 24,320.48 | $34,320 | $ 30,106 | $ 8,772 | $ 21,334 | |||
| 2 | $ 10,000 | 24,320.48 | $ 34,320 | $ 26,408 | $ 7,695 | $ 18,714 | |||
| 3 | $ 10,000 | 24,320.48 | $ 34,320 | $ 23,165 | $ 6,750 | $ 16,416 | |||
| 4 | $ 10,000 | 24,320.48 | $ 34,320 | $ 20,320 | $ 5,921 | $ 14,400 | |||
| $ (60,000) | $ 97,282 | 14% | IRR | $ 100,000 | $ 29,137 | $ 70,863 | |||
| $0.00 | NPV | ||||||||
| End year salvage value = $1040000 | |||||||||
| $ 1,040,000 | |||||||||
| 20 | Years | ||||||||
| 12% | hurdle rate | ||||||||
| $ 10,032,145 | |||||||||
| Cash flows | ∑ Disc.cash flow | Discounted cash flow | ∑ discounted cash flow | ||||||
| 0 | $ (140,000) | $ (140,000) | $ (140,000) | $ (140,000) | |||||
| 1 | $ 35,000 | $ (105,000) | $ 30,702 | $ (109,298) | |||||
| 2 | $ 35,000 | $ (70,000) | $ 26,931 | $ (82,367) | |||||
| 3 | $ 35,000 | $ (35,000) | $ 23,624 | $ (58,743) | |||||
| 4 | $ 35,000 | $ - 0 | $ 20,723 | $ (38,020) | |||||
| 5 | $ 35,000 | $ 35,000 | $ 18,178 | $ (19,842) | |||||
| 6 | $ 35,000 | $ 70,000 | $ 15,946 | $ (3,897) | |||||
| 7 | $ 35,000 | $ 105,000 | $ 13,987 | $ 10,091 | |||||
| 8 | $ 35,000 | $ 140,000 | $ 12,270 | $ 22,360 | |||||
| Discount rate 14% | 9 | $ 35,000 | $ 175,000 | $ 10,763 | $ 33,123 | ||||
| 10 | $ 35,000 | $ 210,000 | $ 9,441 | $ 42,564 | |||||
| 4 | Years | 6.28 | |||||||
| Cash flows | ∑ Disc.cash flow | Discounted cash flow | ∑ discounted cash flow | ||||||
| 0 | $ (4,000) | $ (4,000) | $ (4,000) | $ (140,000) | |||||
| 1 | $ 1,000 | $ (3,000) | $ 877 | $ (3,123) | |||||
| 2 | $ - 0 | $ (3,000) | $ - 0 | $ (3,123) | |||||
| 3 | $ 2,000 | $ (1,000) | $ 1,350 | $ (1,773) | |||||
| 4 | $ 1,000 | $ - 0 | $ 592 | $ (1,181) | |||||
| 5 | $ 500 | $ 500 | $ 260 | $ (921) | |||||
| 4 | Years | N/A | |||||||
| Discount rate 14% |
•Decker Company can purchase a new machine at a cost of $104,320 that will save $20,000 per year in cash operating costs. •The machine has a 10-year life.
BS IS data
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||||||||||||||||||
| Assets | Gross Margin % | Assets | ||||||||||||||||||||||||||||||||||||||
| Current assets: | EPS | $ 2.42 | Current assets: | |||||||||||||||||||||||||||||||||||||
| Cash | $ 30,000 | $ 20,000 | PE Ratio | $ 8.27 | Cash | $ 30,000 | $ 20,000 | |||||||||||||||||||||||||||||||||
| Accounts receivable, net | 20,000 | 17,000 | Div PO Ratio | 83% | Accounts receivable, net | 20,000 | 17,000 | |||||||||||||||||||||||||||||||||
| Inventory | 12,000 | 10,000 | Div Yield Ratio | Inventory | 12,000 | 10,000 | ||||||||||||||||||||||||||||||||||
| Prepaid expenses | 3,000 | 2,000 | ROA | 18% | Add back AT Interest | Prepaid expenses | 3,000 | 2,000 | ||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | Total current assets | 65,000 | 49,000 | Return on common EQ | deduct preferred dinvidends | Total current assets | 65,000 | 49,000 | |||||||||||||||||||||||||
| Sales | 485,500 | 454,000 | 422,500 | 400,000 | 355,000 | 320,000 | 290,000 | 275,000 | Property and equipment: | Book value per common share | common equity only | Property and equipment: | ||||||||||||||||||||||||||||
| COGS | 350,600 | 326,400 | 302,200 | 285,000 | 250,000 | 225,000 | 198,000 | 190,000 | Land | 165,000 | 123,000 | Working Capital | Land | 165,000 | 123,000 | |||||||||||||||||||||||||
| GM$ | 137,900 | 129,600 | 121,300 | 115,000 | 105,000 | 95,000 | 82,000 | 85,000 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | Buildings and equipment, net | 116,390 | 128,000 | Current Ratio | Buildings and equipment, net | 116,390 | 128,000 | |||||||||||||||||
| Sales | 156 | 147 | 145 | 129 | 116 | 105 | 105 | 100 | Total property and equipment | 281,390 | 251,000 | Acid Test | Total property and equipment | 281,390 | 251,000 | |||||||||||||||||||||||||
| % change from prior period | COGS | 150 | 132 | 118 | 104 | 104 | 100 | Total assets | $ 346,390 | $ 300,000 | AR Turnover | Total assets | $ 346,390 | $ 300,000 | ||||||||||||||||||||||||||
| Sales | 6.9% | 7.5% | 5.6% | 12.7% | 10.9% | 10.3% | 5.5% | GM | 135 | 124 | 112 | 108 | 108 | 100 | DSO (avge. Coll. Per) | |||||||||||||||||||||||||
| COGS | 7.4% | 8.0% | 6.0% | 14.0% | 11.1% | 13.6% | 4.2% | Inventory turns | ||||||||||||||||||||||||||||||||
| GM$ | 6.4% | 6.8% | 5.5% | 9.5% | 10.5% | 15.9% | -3.5% | Averages Sales Period | 365/Inv.turns | |||||||||||||||||||||||||||||||
| Liabilities & Stockholders Equity | Times Interest Earned | Liabilities & Stockholders Equity | ||||||||||||||||||||||||||||||||||||||
| 2007 | 2006 | Debt-to-Equity | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
| Accounts payable | $ 39,000 | $ 40,000 | Accounts payable | $ 39,000 | $ 40,000 | |||||||||||||||||||||||||||||||||||
| Notes payable, short-term | 3,000 | 2,000 | Notes payable, short-term | 3,000 | 2,000 | |||||||||||||||||||||||||||||||||||
| Total current liabilities | 42,000 | 42,000 | Total current liabilities | 42,000 | 42,000 | |||||||||||||||||||||||||||||||||||
| Long-term liabilities: | Long-term liabilities: | |||||||||||||||||||||||||||||||||||||||
| Notes payable, long-term | 70,000 | 78,000 | Notes payable, long-term | 70,000 | 78,000 | |||||||||||||||||||||||||||||||||||
| Total liabilities | 112,000 | 120,000 | Total liabilities | 112,000 | 120,000 | |||||||||||||||||||||||||||||||||||
| Stockholders' equity: | Stockholders' equity: | |||||||||||||||||||||||||||||||||||||||
| Common stock, $1 par value | 27,400 | 17,000 | Common stock, $1 par value | 27,400 | 17,000 | |||||||||||||||||||||||||||||||||||
| Additional paid-in capital | 158,100 | 113,000 | Additional paid-in capital | 158,100 | 113,000 | |||||||||||||||||||||||||||||||||||
| Total paid-in capital | 185,500 | 130,000 | Total paid-in capital | 185,500 | 130,000 | |||||||||||||||||||||||||||||||||||
| Retained earnings | 48,890 | 50,000 | Retained earnings | 48,890 | 50,000 | |||||||||||||||||||||||||||||||||||
| Total stockholders' equity | 234,390 | 180,000 | Total stockholders' equity | 234,390 | 180,000 | |||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ 346,390 | $ 300,000 | Total liabilities and stockholders' equity | $ 346,390 | $ 300,000 | |||||||||||||||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||||||||||||||||||
| Sales | $ 494,000 | $ 450,000 | Sales | $ 494,000 | $ 450,000 | |||||||||||||||||||||||||||||||||||
| Cost of goods sold | 140,000 | 127,000 | Cost of goods sold | 140,000 | 127,000 | |||||||||||||||||||||||||||||||||||
| Gross margin | 354,000 | 323,000 | Gross margin | 354,000 | 323,000 | |||||||||||||||||||||||||||||||||||
| Operating expenses | 270,000 | 249,000 | Operating expenses | 270,000 | 249,000 | |||||||||||||||||||||||||||||||||||
| Net operating income | 84,000 | 74,000 | Net operating income | 84,000 | 74,000 | |||||||||||||||||||||||||||||||||||
| Interest expense | 7,300 | 8,000 | Interest expense | 7,300 | 8,000 | |||||||||||||||||||||||||||||||||||
| Net income before taxes | 76,700 | 66,000 | Net income before taxes | 76,700 | 66,000 | |||||||||||||||||||||||||||||||||||
| Less income taxes (30%) | 23,010 | 19,800 | 0.30 | Less income taxes (30%) | 23,010 | 19,800 | ||||||||||||||||||||||||||||||||||
| Net income | $ 53,690 | $ 46,200 | Net income | $ 53,690 | $ 46,200 | |||||||||||||||||||||||||||||||||||
2007 2006 2005 2004 2003 2002 150 132 118 104 104 100 GM 2007 2006 2005 2004 2003 2002 135 124 112 108 108 100
CF review for Final Ch.14
| Final Review | Affect on | |||||||||||||
| Class Company, Inc. | Category | Cash | ||||||||||||
| Balance Sheet as of | Increase | Increase | ||||||||||||
| Assets: | 12/31/08 | 12/31/09 | (Decrease) | (Decrease) | Class Company, Inc. | Cash | ||||||||
| Current Assets: | $s | $s | Balance Sheet as of | Increase | Increase | |||||||||
| Cash | 564,000 | 893,000 | 329000 | (329000) | 12/31/08 | 12/31/09 | (Decrease) | (Decrease) | ||||||
| Accounts Receivable | 600,000 | 675,000 | 75000 | (75000) | Assets: | |||||||||
| Prepaid Expenses | 51,000 | 44,000 | (7000) | 7000 | Current Assets: | $s | $s | |||||||
| Inventory | 700,000 | 725,000 | 25000 | (25000) | Cash | 200,000 | 226,000 | |||||||
| Total Current Assets: | 1,915,000 | 2,337,000 | 422000 | (422000) | Accounts Receivable | 355,000 | 418,000 | |||||||
| Prepaid Expenses | 27,000 | 19,000 | ||||||||||||
| Plant Property & Equipment | 1,000,000 | 1,125,000 | 125000 | (125000) | 3.1933333333 | Other Current Assets | 15,000 | 11,000 | ||||||
| Accumulated Depreciation | (555,000) | (655,000) | (100000) | (100000) | P&L item | Total Current Assets: | 597,000 | 674,000 | 0 | 0 | ||||
| Net Plant Property & Equipment | 445,000 | 470,000 | 25000 | (225000) | ||||||||||
| Plant Property & Equipment | 954,000 | 1,215,000 | ||||||||||||
| Other Non-Current Assets: | Accumulated Depreciation | (332,000) | (445,000) | P&L item | ||||||||||
| Intangibles | 355,000 | 310,000 | (45000) | 45000 | P&L item | Net Plant Property & Equipment | 622,000 | 770,000 | 0 | 0 | ||||
| Deferred Loan Placement Costs | 35,000 | 35,000 | 0 | 0 | P&L item | |||||||||
| Other Non-Current assets | 15,000 | 9,000 | (6000) | 6000 | Other Non-Current Assets: | |||||||||
| Total Other Non-Current Assets | 405,000 | 354,000 | (51000) | 51000 | Goodwill | 375,000 | 350,000 | P&L item | ||||||
| Deferred Loan Placement Costs | 25,000 | 25,000 | P&L item | |||||||||||
| Total Assets | 2,765,000 | 3,161,000 | 396000 | (596000) | Other Non-Current assets | 15,000 | 14,000 | |||||||
| Total Other Non-Current Assets | 415,000 | 389,000 | 0 | 0 | ||||||||||
| Liabilities: | 0 | |||||||||||||
| Current Liabilities | Total Assets | 1,634,000 | 1,833,000 | 0 | 0 | |||||||||
| Accounts Payable | 225,000 | 250,000 | 25,000 | 25,000 | ||||||||||
| Accrued Expenses | 74,000 | 81,000 | 7,000 | 7,000 | Liabilities: | |||||||||
| Current Portion of LT debt | 40,000 | 70,000 | 30,000 | 30,000 | Current Portion of Long Term Debt | 88,000 | 88,000 | |||||||
| Other Current Liabilities | 35,000 | 25,000 | (10,000) | (10,000) | Accounts Payable | 129,000 | 139,000 | |||||||
| Total Current Liabilities | 374,000 | 426,000 | 52,000 | 52,000 | Accrued Expenses | 51,000 | 64,000 | |||||||
| Other Current Liabilities | 23,000 | 11,000 | ||||||||||||
| Non-Current Liabilities | Total Current Liabilities | 291,000 | 302,000 | 0 | 0 | |||||||||
| Long Term Debt | 2,100,000 | 2,200,000 | 100,000 | 100,000 | ||||||||||
| Deferred Income Taxes | 95,000 | 105,000 | 10,000 | 10,000 | P&L item | Non-Current Liabilities | ||||||||
| Other Non-current Liabilities | 64,000 | 47,000 | (17,000) | (17,000) | Long Term Debt | 1,100,000 | 915,000 | |||||||
| Total Non-Current Liabilities | 2,259,000 | 2,352,000 | 93,000 | 93,000 | Deferred Income Taxes | 83,000 | 99,000 | |||||||
| Other Non-current Liabilities | 14,000 | 12,000 | P&L item | |||||||||||
| Total Liabilities | 2,633,000 | 2,778,000 | 145,000 | 145,000 | Total Non-Current Liabilities | 1,197,000 | 1,026,000 | 0 | 0 | |||||
| Owners' Equity | Total Liabilities | 1,488,000 | 1,328,000 | 0 | 0 | |||||||||
| Common Stock @ par = $0.01 | 100 | 100 | 0 | 0 | ||||||||||
| Additional Paid-in Capital | 99,900 | 99,900 | 0 | 0 | ||||||||||
| Common Dividends Paid | (151,000) | (151,000) | (151,000) | |||||||||||
| Retained Earnings | 32,000 | 434,000 | 402,000 | 402,000 | Owners Equity | |||||||||
| Total Owners' Equity | 132,000 | 383,000 | 251,000 | 251,000 | Common Stock @ par = $0.01 | 100 | 100 | |||||||
| Additional Paid-in Capital | 99,900 | 99,900 | ||||||||||||
| Total Liabilities and Owners' Equity | 2,765,000 | 3,161,000 | 396,000 | 396,000 | Retained Earnings | 46,000 | 405,000 | |||||||
| Total Owners' Equity | 146,000 | 505,000 | 0 | 0 | ||||||||||
| 0 | 0 | |||||||||||||
| Total Liabilities and Owners Equity | 1,634,000 | 1,833,000 | 0 | 0 | ||||||||||
| Note: in this example we have goodwill - which is also a non-cash charge to income | ||||||||||||||
| like depreciation - so we add that back to net income just like deprecation: | ||||||||||||||
| 0 | 0 | |||||||||||||
| Class Company, Inc. | Note: in this example we have goodwill - which is also a non-cash charge to income | |||||||||||||
| Statement of Income | like depreciation - so we add that back to net income just like deprecation: | |||||||||||||
| Period Ending 12/31/2009 | ||||||||||||||
| $s | $s | |||||||||||||
| Revenue | 7,000,000 | 100.0% | Class Company, Inc. | |||||||||||
| Statement of Income | ||||||||||||||
| Cost of Goods Sold | 5,000,000 | 71.4% | Period Ending 12/31/2009 | |||||||||||
| $s | $s | |||||||||||||
| Gross Profit | 2,000,000 | 28.6% | Revenue | 3,300,000 | 100.0% | |||||||||
| Operating Expenses: | Cost of Goods Sold | 1,788,000 | 54.2% | |||||||||||
| Selling expense | 700,000 | 10.0% | ||||||||||||
| General Expense | 300,000 | 4.3% | Gross Profit | 1,512,000 | 45.8% | |||||||||
| Administrative expense | 100,000 | 1.4% | ||||||||||||
| Other Operating | 162,000 | 2.3% | Wage Expense | 721,000 | 21.8% | |||||||||
| Amortization of Intangibles | 45,000 | 0.6% | Advertising & Marketing Expense | 78,000 | 2.4% | |||||||||
| Total Operating Expenses | 1,307,000 | 18.7% | Vehicle Expenses | 22,000 | 0.7% | |||||||||
| Insurance and Other | 48,000 | 1.5% | ||||||||||||
| Operating Income | 693,000 | 9.9% | Depreciation | 113,000 | 3.4% | |||||||||
| Write-off of Goodwill | 25,000 | 0.8% | ||||||||||||
| Other Expense ( NBV = $52000, Cost $114000, sold $42000) | (10,000) | -0.1% | Total Expenses | 1,007,000 | 30.5% | |||||||||
| Interest Expense | (65,000) | -0.9% | ||||||||||||
| Income Before Taxes | 618,000 | 8.8% | Provision for Income Taxes | 505,000 | 15.3% | |||||||||
| Provision for Income Taxes | 216,000 | 3.1% | ||||||||||||
| Net Income | 402,000 | 5.7% | ||||||||||||
| Net Income | 402,000 | 12.2% | ||||||||||||
| Class Company, Inc. | ||||||||||||||
| Statement of Cash Flows for Period Ending 12/31/2009 | ||||||||||||||
| $s | ||||||||||||||
| Cash Flows From Operating Activities: | Class Company, Inc. | |||||||||||||
| Net Income | 402,000 | Statement of Cash Flows for Period Ending 12/31/2009 | ||||||||||||
| Plus: Depreciation Expense | 162,000 | |||||||||||||
| Plus: Amortization Expense | 45,000 | $s | ||||||||||||
| (Gain)/Loss on Sale of PPE | 10,000 | |||||||||||||
| Changes in Current Assets and Liabilities | Cash Flows From Operating Activities: | |||||||||||||
| (Increase)/Decrease Accounts Receivable | (75,000) | Net Income | 402,000 | |||||||||||
| (Increase)/Decrease Prepaid Expenses | 7,000 | Plus: Depreciation | 0 | |||||||||||
| (Increase)/Decrease Inventory | (25,000) | Plus: Write-off of Goodwill | 0 | |||||||||||
| Increase/(Decrease) Accounts Payable | 25,000 | Changes in Current Assets and Liabilities | ||||||||||||
| Increase/(Decrease) Accrued Expenses | 7,000 | (Increase) Accounts Receivable | 0 | |||||||||||
| Increase/(Decrease) Other Current Liabilities | (10,000) | Decrease Prepaid Expenses | 0 | |||||||||||
| Decrease Other Current Assets | 0 | |||||||||||||
| Other Changes | Increase Accounts Payable | 0 | ||||||||||||
| Increase/(Decrease) in Deferred Taxes | 10,000 | Increase Accrued Expenses | 0 | |||||||||||
| Increase/(Decrease)in Other Long Term Liabilities | (17,000) | (Decrease) Other Current Liabilities | 0 | |||||||||||
| Total Change in Cash from Operating Activities | 541,000 | Other Changes | ||||||||||||
| Decrease in Other Non-Current Assets | 0 | |||||||||||||
| Cash From Investing Activities | Increase in Deferred Taxes | 0 | ||||||||||||
| Capital Expenditures | (239,000) | Decrease in Other Long Term Liabilities | 0 | |||||||||||
| (increase)/Decrease Other Non-current Assets | 6,000 | |||||||||||||
| Proceeds from disposal of PPE | 42,000 | |||||||||||||
| Total Cash Flows from Investing Activities | (191,000) | Total Change in Cash from Operating Activities | 402,000 | |||||||||||
| Cash Flows from Financing Activities | Cash From Investing Activities | |||||||||||||
| Increase/(Decrease) in Long term Debt | 130,000 | |||||||||||||
| Divdends paid | (151,000) | Capital Expenditures | 0 | |||||||||||
| Total Cash Flows from Financing Activities | (21,000) | Total Cash Flows from Investing Activities | 0 | |||||||||||
| Net Change in Cash Position | 329,000 | 0 | Cash Flows from Financing Activities | |||||||||||
| Opening Cash Balance | 564,000 | Increase (decrease) in Invested Capital | ||||||||||||
| Ending Cash Balance | 893,000 | Repayment of Debt | 0 | |||||||||||
| Total Cash Flows from Financing Activities | 0 | |||||||||||||
| Ratio Analysis: 2009 | Stock Price = | $ 45.00 | ||||||||||||
| # of Shares = | 75,000 | |||||||||||||
| ratio 2 decimals; % format xx.x% | ||||||||||||||
| PE Ratio | 8.40 | |||||||||||||
| Return on Total Assets | 13.6% | |||||||||||||
| Return on common equity | 156.1% | there is no preferred | ||||||||||||
| Book Value per share | $ 5.11 | |||||||||||||
| Working capital | 1,911,000 | |||||||||||||
| Current ratio | 5.49 | |||||||||||||
| Acid Test Ratio | 3.68 | |||||||||||||
| A/R turnover | 10.98 | all sales are credit sales | ||||||||||||
| Average collection period | 32.79 | |||||||||||||
| Inventory turnover | 7.02 | |||||||||||||
| Times interest earned | 10.66 | show as a positive # | ||||||||||||
| Dedt to equity ratio | 7.25 | |||||||||||||
| Net Change in Cash Position | 402,000 | |||||||||||||
| Opening Cash Balance | 200,000 | |||||||||||||
| Ending Cash Balance | 226,000 | |||||||||||||
| Definition of | 1 of 2 | |||||||||||||
| Cash Flow | ||||||||||||||
| This definition of cash flow provides a more accurate representation | Definition of | |||||||||||||
| the funds the company has available to repay its debt and | Cash Flow | |||||||||||||
| cash needs. | ||||||||||||||
| Cash flow From Operations | ||||||||||||||
| Cash flow from operations | Cash Flow = Net income: | |||||||||||||
| = Net income: | =+ or - Non-cash income and expenses | |||||||||||||
| =+ or - Non-cash Expenses (depreciation and amortization) | =+ or - Nonrecurring income and expenses | |||||||||||||
| =+ or - Nonrecurring income and expenses (Extraordinary or discontinued Ops) | =+ or - Changes in the operating accounts | |||||||||||||
| =+ or - Gain/loss on sales of fixed assets/LT intangibles - Other income/Expense | This definition of cash flow provides a more accurate representation | |||||||||||||
| the funds the company has available to repay its debt and | ||||||||||||||
| +/- Changes in operating accounts | cash needs. | |||||||||||||
| (aka working capital accounts) | The operating accounts referred to in the cash flow definition | |||||||||||||
| include: | (sometimes called working capital accounts or operating | |||||||||||||
| • Accounts receivable | Current Assets and Current liabilities for the most part | include: | ||||||||||||
| • Inventory | • Accounts receivable | Current Assets and Current liabilities for the most part | ||||||||||||
| • Prepaid assets | • Inventory | |||||||||||||
| • Other short-term assets | • Prepaid assets | |||||||||||||
| • Accounts payable | • Other short-term assets | |||||||||||||
| • Accrued liabilities | • Accounts payable | |||||||||||||
| • Other short-term liabilities | • Accrued liabilities | |||||||||||||
| Notice that this list includes any asset or liability classifed as short-term | • Other short-term liabilities | |||||||||||||
| or current on the balance sheet except: | Notice that this list includes any asset or liability shown short-term | |||||||||||||
| • Cash and cash equivalents | we are measuring cash changes | or current section of the balance sheet except: | ||||||||||||
| • Short-term investments | that's a cash equivalent | • Cash and cash equivalents | we are measuring cash changes | |||||||||||
| • Notes payable | a note payable though short term is a form of debt, i.e., Financing | • Short-term investments | that's a cash equivalent | |||||||||||
| • Current Portion Long Term Debt | This is short term because it’s the part of the long term debt | • Notes payable | a note payable though short term is a form of debt, i.e., Financing | |||||||||||
| due within 12 months but it's still debt to outside party | • Current Portion Long Term Debt | This is short term because it’s the part of the long term debt | ||||||||||||
| not a supplier | due within 12 months but it's still debt to outside party | |||||||||||||
| Notice that this section of the balance sheet that includes long term | not a supplier | |||||||||||||
| assets or liabilities that relate to the Income Statement such as | Cash Flow from Investing Activities: | |||||||||||||
| LT term deferred tax assets or liabilites | • It shows uses of cash to acquire assets, such as capital | |||||||||||||
| expenditures, investments and acquisitions | ||||||||||||||
| Cash Flow from Investing Activities: | • Funds raised when any of these types of assets are sold are | |||||||||||||
| • Uses of cash to acquire assets, such as capital | shown in this section as sources of cash | |||||||||||||
| expenditures, investments and acquisitions | ||||||||||||||
| • Funds raised when any of these types of assets are sold are | ||||||||||||||
| shown in this section as sources of cash | Cash Flow from Financing Activities: | |||||||||||||
| Shows increases or decreases in all sources of external | ||||||||||||||
| financing, such as short-term bank borrowings, commercial | ||||||||||||||
| Cash Flow from Financing Activities: | paper, long-term bank debt, other long-term debt and | |||||||||||||
| Shows increases or decreases in all sources of external | subordinated debt | Bank & third party borrowings | ||||||||||||
| financing, such as short-term bank borrowings, commercial | Also includes equity transactions, such as cash generated by | |||||||||||||
| paper, long-term bank debt, other long-term debt and | stock issues or other capital injections, and cash used to | |||||||||||||
| subordinated debt | Bank & third party borrowings | repurchase stock or to pay dividends | ||||||||||||
| Also includes equity transactions, such as cash generated by | More invested capital less payments to owners | |||||||||||||
| stock issues or other capital injections, and cash used to | ||||||||||||||
| repurchase stock or to pay dividends | ||||||||||||||
| More invested capital less payments to owners |
HCT--&P of &N---&D,&T---&F,&A
Examine operating or financing
Run the businesss
External sources s
Internal Actions
Final Probs
| A. Using following Balance Sheet & Income Statement, Peforform Ratio Analysis for ratio listed & Create a \Cash Flow Statement | ||||||||||||||
| Affect on | ||||||||||||||
| Class Company, Inc. | Category | Cash | ||||||||||||
| Balance Sheet as of | Increase | Increase | ||||||||||||
| Assets: | 12/31/11 | 12/31/12 | (Decrease) | (Decrease) | Class Company, Inc. | Cash | ||||||||
| Current Assets: | $s | $s | Balance Sheet as of | Increase | Increase | |||||||||
| Cash | 188,000 | 216,000 | 28000 | (28000) | 12/31/08 | 12/31/09 | (Decrease) | (Decrease) | ||||||
| Accounts Receivable | 355,000 | 450,000 | 95000 | (95000) | Assets: | |||||||||
| Prepaid Expenses | 39,000 | 19,000 | (20000) | 20000 | Current Assets: | $s | $s | |||||||
| Inventory | 500,000 | 550,000 | 50000 | (50000) | Cash | 200,000 | 226,000 | |||||||
| Total Current Assets: | 1,082,000 | 1,235,000 | 153000 | (153000) | Accounts Receivable | 355,000 | 418,000 | |||||||
| Prepaid Expenses | 27,000 | 19,000 | ||||||||||||
| Plant Property & Equipment | 854,000 | 1,027,000 | 173000 | (173000) | 3.1933333333 | Other Current Assets | 15,000 | 11,000 | ||||||
| Accumulated Depreciation | (335,000) | (447,000) | (112000) | 112000 | P&L item | Total Current Assets: | 597,000 | 674,000 | 0 | 0 | ||||
| Net Plant Property & Equipment | 519,000 | 580,000 | 61000 | (61000) | ||||||||||
| Plant Property & Equipment | 954,000 | 1,215,000 | ||||||||||||
| Other Non-Current Assets: | Accumulated Depreciation | (332,000) | (445,000) | P&L item | ||||||||||
| Intangibles | 475,000 | 450,000 | (25000) | 25000 | P&L item | Net Plant Property & Equipment | 622,000 | 770,000 | 0 | 0 | ||||
| Deferred Loan Placement Costs | 35,000 | 35,000 | 0 | 0 | P&L item | |||||||||
| Other Non-Current assets | 10,000 | 4,000 | (6000) | 6000 | Other Non-Current Assets: | |||||||||
| Total Other Non-Current Assets | 520,000 | 489,000 | (31000) | 31000 | Goodwill | 375,000 | 350,000 | P&L item | ||||||
| Deferred Loan Placement Costs | 25,000 | 25,000 | P&L item | |||||||||||
| Total Assets | 2,121,000 | 2,304,000 | 183000 | (183000) | Other Non-Current assets | 15,000 | 14,000 | |||||||
| Total Other Non-Current Assets | 415,000 | 389,000 | 0 | 0 | ||||||||||
| Liabilities: | 0 | |||||||||||||
| Current Liabilities | Total Assets | 1,634,000 | 1,833,000 | 0 | 0 | |||||||||
| Accounts Payable | 129,000 | 114,000 | (15,000) | (15,000) | ||||||||||
| Accrued Expenses | 53,000 | 62,000 | 9,000 | 9,000 | Liabilities: | |||||||||
| Current Portion of LT debt | 29,000 | 61,000 | 32,000 | 32,000 | Current Portion of Long Term Debt | 88,000 | 88,000 | |||||||
| Other Current Liabilities | 23,000 | 11,000 | (12,000) | (12,000) | Accounts Payable | 129,000 | 139,000 | |||||||
| Total Current Liabilities | 234,000 | 248,000 | 14,000 | 14,000 | Accrued Expenses | 51,000 | 64,000 | |||||||
| Other Current Liabilities | 23,000 | 11,000 | ||||||||||||
| Non-Current Liabilities | Total Current Liabilities | 291,000 | 302,000 | 0 | 0 | |||||||||
| Long Term Debt | 1,050,000 | 950,000 | (100,000) | (100,000) | ||||||||||
| Deferred Income Taxes | 83,000 | 99,000 | 16,000 | 16,000 | P&L item | Non-Current Liabilities | ||||||||
| Other Non-current Liabilities | 64,000 | 47,000 | (17,000) | (17,000) | Long Term Debt | 1,100,000 | 915,000 | |||||||
| Total Non-Current Liabilities | 1,197,000 | 1,096,000 | (101,000) | (101,000) | Deferred Income Taxes | 83,000 | 99,000 | |||||||
| Other Non-current Liabilities | 14,000 | 12,000 | P&L item | |||||||||||
| Total Liabilities | 1,431,000 | 1,344,000 | (87,000) | (87,000) | Total Non-Current Liabilities | 1,197,000 | 1,026,000 | 0 | 0 | |||||
| Owners Equity | Total Liabilities | 1,488,000 | 1,328,000 | 0 | 0 | |||||||||
| Common Stock @ par = $0.01 | 100 | 100 | 0 | 0 | ||||||||||
| Additional Paid-in Capital | 99,900 | 99,900 | 0 | 0 | ||||||||||
| Divdends | (100,000) | |||||||||||||
| Retained Earnings | 590,000 | 960,000 | 370,000 | 370,000 | Owners Equity | |||||||||
| Total Owners' Equity | 690,000 | 960,000 | 370,000 | 370,000 | Common Stock @ par = $0.01 | 100 | 100 | |||||||
| Additional Paid-in Capital | 99,900 | 99,900 | ||||||||||||
| Total Liabilities and Owners Equity | 2,121,000 | 2,304,000 | 283,000 | 283,000 | Retained Earnings | 46,000 | 405,000 | |||||||
| Total Owners' Equity | 146,000 | 505,000 | 0 | 0 | ||||||||||
| 0 | 0 | |||||||||||||
| Total Liabilities and Owners Equity | 1,634,000 | 1,833,000 | 0 | 0 | ||||||||||
| Note: in this example we have goodwill - which is also a non-cash charge to income | ||||||||||||||
| like depreciation - so we add that back to net income just like deprecation: | ||||||||||||||
| 0 | 0 | |||||||||||||
| Class Company, Inc. | Note: in this example we have goodwill - which is also a non-cash charge to income | |||||||||||||
| Statement of Income | like depreciation - so we add that back to net income just like deprecation: | |||||||||||||
| Period Ending 12/31/2009 | ||||||||||||||
| $s | $s | |||||||||||||
| Revenue | 5,100,000 | 100.0% | Class Company, Inc. | |||||||||||
| Statement of Income | ||||||||||||||
| Cost of Goods Sold | 3,050,000 | 59.8% | Period Ending 12/31/2009 | |||||||||||
| $s | $s | |||||||||||||
| Gross Profit | 2,050,000 | 40.2% | Revenue | 3,300,000 | 100.0% | |||||||||
| Operating Expenses: | Cost of Goods Sold | 1,788,000 | 54.2% | |||||||||||
| Selling expense | 800,000 | 15.7% | ||||||||||||
| General Expense | 250,000 | 4.9% | Gross Profit | 1,512,000 | 45.8% | |||||||||
| Administrative expense | 125,000 | 2.5% | ||||||||||||
| Depreciation | 124,000 | 2.4% | Wage Expense | 721,000 | 21.8% | |||||||||
| Write-off of Goodwill | 25,000 | 0.5% | Advertising & Marketing Expense | 78,000 | 2.4% | |||||||||
| Total Operating Expenses | 1,324,000 | 26.0% | Vehicle Expenses | 22,000 | 0.7% | |||||||||
| Insurance and Other | 48,000 | 1.5% | ||||||||||||
| Operating Income | 726,000 | 14.2% | Depreciation | 113,000 | 3.4% | |||||||||
| Write-off of Goodwill | 25,000 | 0.8% | ||||||||||||
| Other Income [includes Gain/Loss Sale of Assets] | 9,000 | 0.2% | Total Expenses | 1,007,000 | 30.5% | |||||||||
| Interest Expense | 65,000 | 1.3% | ||||||||||||
| Income Before Taxes | 670,000 | 13.1% | Provision for Income Taxes | 505,000 | 15.3% | |||||||||
| Provision for Income Taxes | 300,000 | 5.9% | ||||||||||||
| Net Income | 370,000 | 7.3% | ||||||||||||
| Sale of assets in 2009 | ||||||||||||||
| ( NBV = $6000, Cost $22000, sold $15000) | ||||||||||||||
| Acquired New debt: $200,000 | ||||||||||||||
| No Intangbles acquired | ||||||||||||||
| Net Income | 370,000 | 11.2% | ||||||||||||
| Class Company, Inc. | ||||||||||||||
| Statement of Cash Flows for Period Ending 12/31/2012 | ||||||||||||||
| $s | ||||||||||||||
| Cash Flows From Operating Activities: | Class Company, Inc. | |||||||||||||
| Net Income | 370,000 | Statement of Cash Flows for Period Ending 12/31/2009 | ||||||||||||
| Plus: Depreciation Expense | 124,000 | |||||||||||||
| Plus: Amortization Expense | 25,000 | $s | ||||||||||||
| Less: Gain on Sale of PPE | (9,000) | |||||||||||||
| Changes in Current Assets and Liabilities | Cash Flows From Operating Activities: | |||||||||||||
| (Increase) Accounts Receivable | (95,000) | Net Income | 370,000 | |||||||||||
| Decrease Prepaid Expenses | 20,000 | Plus: Depreciation | 0 | |||||||||||
| (Increase) Inventory | (50,000) | Plus: Write-off of Goodwill | 0 | |||||||||||
| (Decrease) Accounts Payable | (15,000) | Changes in Current Assets and Liabilities | ||||||||||||
| Increase Accrued Expenses | 9,000 | (Increase) Accounts Receivable | 0 | |||||||||||
| (Decrease) Other Current Liabilities | (12,000) | Decrease Prepaid Expenses | 0 | |||||||||||
| Decrease Other Current Assets | 0 | |||||||||||||
| Other Changes | Increase Accounts Payable | 0 | ||||||||||||
| Increase in Deferred Taxes | 16,000 | Increase Accrued Expenses | 0 | |||||||||||
| Decrease in Other Long Term Liabilities | (17,000) | (Decrease) Other Current Liabilities | 0 | |||||||||||
| Total Change in Cash from Operating Activities | 366,000 | Other Changes | ||||||||||||
| Decrease in Other Non-Current Assets | 0 | |||||||||||||
| Cash From Investing Activities | Increase in Deferred Taxes | 0 | ||||||||||||
| Capital Expenditures | (197,000) | Decrease in Other Long Term Liabilities | 0 | |||||||||||
| Other Non-current Assets | 6,000 | |||||||||||||
| Proceeds from disposal of PPE | 21,000 | |||||||||||||
| Total Cash Flows from Investing Activities | (170,000) | Total Change in Cash from Operating Activities | 370,000 | |||||||||||
| Cash Flows from Financing Activities | Cash From Investing Activities | |||||||||||||
| Repayment of Debt | (68,000) | Capital Expenditures | 0 | |||||||||||
| Total Cash Flows from Financing Activities | (68,000) | Total Cash Flows from Investing Activities | 0 | |||||||||||
| Net Change in Cash Position | 128,000 | (100,000) | Cash Flows from Financing Activities | |||||||||||
| Opening Cash Balance | 188,000 | Increase (decrease) in Invested Capital | ||||||||||||
| Ending Cash Balance | 216,000 | Repayment of Debt | 0 | |||||||||||
| Total Cash Flows from Financing Activities | 0 | |||||||||||||
| B. | Ratio Analysis: 2012 | Stock Price = | $ 45.00 | |||||||||||
| # of Shares = | 75,000 | |||||||||||||
| ratio 2 decimals; % format xx.x% | ||||||||||||||
| PE Ratio | 9.12 | |||||||||||||
| Return on Total Assets | 16.7% | |||||||||||||
| Return on common equity | 44.8% | there is no preferred | ||||||||||||
| Book Value per share | $ 12.80 | |||||||||||||
| Working capital | 987,000 | |||||||||||||
| Current ratio | 4.98 | |||||||||||||
| Acid Test Ratio | 2.69 | |||||||||||||
| A/R turnover | 12.67 | all sales are credit sales | ||||||||||||
| Average collection period | 28.81 | |||||||||||||
| Inventory turnover | 5.81 | |||||||||||||
| Times interest earned | 11.17 | show as a positive # | ||||||||||||
| Dedt to equity ratio | 1.40 | |||||||||||||
| C. use Hi-Low Method to compute Fixed OH per month & variable OH per unit | ||||||||||||||
| Manufactiring Overhead 2010: | Qty. Produced | Spending | ||||||||||||
| Sept | 10,000 | 37600 | ||||||||||||
| Oct | 9,600 | 32400 | ||||||||||||
| Nov | 9,100 | 26200 | ||||||||||||
| Dec | 10,900 | 47800 | ||||||||||||
| D.Using data set below compute [1]:Contribtion margin per unit | ||||||||||||||
| [2]BE units, [3] Operating leverage at Base volume [4] Units to achive target income | ||||||||||||||
| [5] "What-if"--Profit if Advertising triples, Fixed selling decrease by $20000, | ||||||||||||||
| Variable material product cost increase by $1 per unit, sell price unit up $15 | ||||||||||||||
| Units decreas by 12% | ||||||||||||||
| Fixed | Variable per unit | Net Change in Cash Position | 370,000 | |||||||||||
| Sell prce per unit | $ 70.00 | Ending Cash Balance | 226,000 | |||||||||||
| Diect labor & materials | $ 25.00 | |||||||||||||
| Manufacturing overhead | $ 55,000 | $ 9.00 | ||||||||||||
| Selling Expense excpt advertising | $ 35,000 | 10% | of sell prce | |||||||||||
| Advertsing | $ 19,000 | |||||||||||||
| Adninistrative expense | $ 28,000 | $ 1.00 | ||||||||||||
| Base units | 5,500 | |||||||||||||
| E. Cap X: Compute NPV, Profitabilty Index, | ||||||||||||||
| Initial capital including working capital | 120,000 | |||||||||||||
| Initial working capital recovered in last year | 20,000 | |||||||||||||
| Project life | 4 | years | ||||||||||||
| Capital value at end of project | 15,000 | |||||||||||||
| Before tax savings per year | 83,333 | |||||||||||||
| before tax - one time maintenace fees in yr.3 | 20,000 | |||||||||||||
| tax rate | 40% | |||||||||||||
| Cost of debt | 6% | |||||||||||||
| amount of debt | 5,000,000 | |||||||||||||
| cost of equity | 12% | |||||||||||||
| Amount of equity | 10,000,000 | |||||||||||||
Student:________________________________________________ &P of &N
ACC220------HCT &"Arial,Bold Italic"&12&EOpen Book Portion &"Arial,Bold"&12Cash Flows & Ratios&"Arial,Regular"&10 Final Exam
operating
Final review
| Rider University | ||||||||||
| Managerial Accounting | 2 hour test | |||||||||
| HCTamburro | No extra time | |||||||||
| Final Study Aid | Revised | Ends in 2 hrs. | ||||||||
| A. | Open book: | Problems to solve | ||||||||
| B. | 1. | Ratio computations | Ch. 15 | [you get comparative BS & IS] | ||||||
| 2. | Cash Flow [1 section only] | Ch.14 | ||||||||
| 3. | Hi-low variable cost Y = a + bx to get fixed & variable manufacturing costs | |||||||||
| then CVP | BE, Target, Operating leverage | Ch. 5,6 | ||||||||
| 4. | CapX | Ch.13 | NPV, Simple rate of return | |||||||
| 5. | Flexible budgeting | Ch.9 | brief combined problem | |||||||
| 6. | Standard Costing | Ch.10 | on Overhead - Fxd. Variable | |||||||
| C. | Duration: 3 hours [for open & closed] and that's it - no extra time | |||||||||
| D. | Caution: Open book sounds great but often causes students | |||||||||
| to use too much time on a problem and | ||||||||||
| run out of time; be careful about this | ||||||||||
| E. | Tools | |||||||||
| you can use for open book: | ||||||||||
| textbook | ||||||||||
| any & all notes | ||||||||||
| calculator without more than nominal memory | ||||||||||
| PC/Laptop/Handheld/phone/Smartphone/advanced functionhandheld calculator etc with MS apps or similar handheld NO NO NO NO | ||||||||||
| Web-book NO NO NO | ||||||||||
HCT---&P of &N---&D,&T---&F,&F
Ch.6VarAbs Cost OLD
| Chapter 6 Variable/ FAC Costing | Chapter 6 Variable/ FAC Costing | Chapter 6 Variable/ FAC Costing | ||||||||||||||||||||
| Complex UP | $s | $s | $ Per Unit | $ Per Unit | $ Per Unit | Complex No change | $s | $s | $ Per Unit | $ Per Unit | $ Per Unit | Complex DOWN | $s | $s | $ Per Unit | $ Per Unit | $ Per Unit | |||||
| Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | |||||||||||
| Units Produced | 5,000 | Units Produced | 5,000 | Units Produced | 5,000 | |||||||||||||||||
| Sell Price per unit | $ 13.50 | Sell Price per unit | $ 13.50 | Sell Price per unit | $ 13.50 | |||||||||||||||||
| Expenses/Costs | Expenses/Costs | Expenses/Costs | ||||||||||||||||||||
| Direct Materials | 11,500 | $ 2.300 | $ - 0 | Direct Materials | 11,500 | $ 2.300 | $ - 0 | Direct Materials | 11,500 | $ 2.300 | $ - 0 | |||||||||||
| Direct Labor | 9,800 | $ 1.960 | $ - 0 | Direct Labor | 9,800 | $ 1.960 | $ - 0 | Direct Labor | 9,800 | $ 1.960 | $ - 0 | |||||||||||
| Manufacturing OH | 7,800 | 12,500 | $ 1.560 | $ 2.500 | Manufacturing OH | 7,800 | 12,500 | $ 1.560 | $ 2.500 | Manufacturing OH | 7,800 | 12,500 | $ 1.560 | $ 2.500 | ||||||||
| Selling Expenses | 2,500 | 7,500 | $ 0.500 | $ 1.500 | Selling Expenses | 2,500 | 7,500 | $ 0.500 | $ 1.500 | Selling Expenses | 2,500 | 7,500 | $ 0.500 | $ 1.500 | ||||||||
| Admin. Expense | 6,600 | $ 1.320 | Admin. Expense | 6,600 | $ 1.320 | Admin. Expense | 6,600 | $ 1.320 | ||||||||||||||
| Totals: | 31,600 | 26,600 | $ 6.320 | $ 5.320 | $ 13.50 | Totals: | 31,600 | 26,600 | $ 6.320 | $ 5.320 | $ 13.50 | Totals: | 31,600 | 26,600 | $ 6.320 | $ 5.320 | $ 13.50 | |||||
| $ Per Unit | $ Per Unit | $ Per Unit | $ Per Unit | $ Per Unit | $ Per Unit | |||||||||||||||||
| Variable | Fixed | Variable | Fixed | Variable | Fixed | |||||||||||||||||
| Cost of Production | Variable | $ 5.820 | Cost of Production | Variable | $ 5.820 | Cost of Production | Variable | $ 5.820 | ||||||||||||||
| FAC | 8.32 | FAC | 8.32 | FAC | 8.32 | |||||||||||||||||
| Beginning Inventory Units | 1100 | $ 5.820 | 8.32 | FAC | Beginning Inventory Units | 0 | $ 5.820 | 8.32 | FAC | Beginning Inventory Units | 0 | $ 5.820 | 8.32 | FAC | ||||||||
| Units Sold | 4950 | Units Sold | 5000 | Units Sold | 5100 | |||||||||||||||||
| Period Costs: | Variable | FAC | Period Costs: | Variable | FAC | Period Costs: | Variable | FAC | ||||||||||||||
| Manufacturing OH | 12,500 | 0 | Manufacturing OH | 12,500 | 0 | Manufacturing OH | 12,500 | 0 | ||||||||||||||
| Selling Expenses | 7,500 | 10,000 | Selling Expenses | 7,500 | 10,000 | Selling Expenses | 7,500 | 10,000 | ||||||||||||||
| Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | ||||||||||||||
| Total Period Costs | 26,600 | 16,600 | Total Period Costs | 26,600 | 16,600 | Total Period Costs | 26,600 | 16,600 | ||||||||||||||
| Var. costing | FAC Costing | Var. costing | FAC Costing | Var. costing | FAC Costing | |||||||||||||||||
| Sales | $ 66,825 | $ 66,825 | Sales | $ 67,500 | $ 67,500 | Sales | $ 68,850 | $ 68,850 | ||||||||||||||
| Variable Cost of Sales | 28,809 | 28,809 | Variable Cost of Sales | 29,100 | 29,100 | Variable Cost of Sales | 29,682 | 29,682 | ||||||||||||||
| Fixed Mfg. OH | - 0 | 12,375 | Fixed Mfg. OH | - 0 | 12,500 | Fixed Mfg. OH | - 0 | 12,750 | ||||||||||||||
| Variable Selling Expense | 2,500 | - 0 | Variable Selling Expense | 2,500 | - 0 | Variable Selling Expense | 2,500 | - 0 | ||||||||||||||
| Contribution Margin | 35,516 | Contribution Margin | 35,900 | Contribution Margin | 36,668 | |||||||||||||||||
| Gross Profit | 25,641 | Gross Profit | 25,900 | Gross Profit | 26,418 | |||||||||||||||||
| Fixed Mfg. OH | 12,500 | - 0 | Fixed Mfg. OH | 12,500 | - 0 | Fixed Mfg. OH | 12,500 | - 0 | ||||||||||||||
| Variable Selling Expense | - 0 | 2,500 | Variable Selling Expense | - 0 | 2,500 | Variable Selling Expense | - 0 | 2,500 | ||||||||||||||
| Fixed Selling Expense | 7,500 | 7,500 | Fixed Selling Expense | 7,500 | 7,500 | Fixed Selling Expense | 7,500 | 7,500 | ||||||||||||||
| Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | ||||||||||||||
| Operating expenses | 26,600 | 16,600 | Operating expenses | 26,600 | 16,600 | No change in | Operating expenses | 26,600 | 16,600 | |||||||||||||
| Difference | Fixed MOH | Difference | Fixed MOH | Difference | Fixed MOH | |||||||||||||||||
| Operating Income | 8,916 | 9,041 | 125 | into Inventory | Operating Income | 9,300 | 9,300 | - 0 | in Inventory | Operating Income | 10,068 | 9,818 | (250) | from Inventory | ||||||||
| $s | $s | $s | ||||||||||||||||||||
| Units | Var. costing | FAC Costing | Units | Var. costing | FAC Costing | Units | Var. costing | FAC Costing | ||||||||||||||
| Beginning Inventory | 1100 | 6,402 | 9,152 | Beginning Inventory | 0 | 0 | 0 | Beginning Inventory | 1100 | 6,402 | 9,152 | |||||||||||
| Produced | 5,000 | Produced | 5,000 | Produced | 5,000 | |||||||||||||||||
| Sold | (4,950) | Sold | (5,000) | Sold | (5,100) | |||||||||||||||||
| Ending Inventory | 1150 | 6,693 | 9,568 | Ending Inventory | 0 | 0 | 0 | Ending Inventory | 1000 | 5,820 | 8,320 | |||||||||||
| 291 | 416 | 125 | 0 | 0 | 0 | (582) | (832) | (250) | ||||||||||||||
| Production = sales; unit costs did not change from inventory per unit | ||||||||||||||||||||||
| Qty | Var.Each | |||||||||||||||||||||
| Sales | 500 | 1000 | ||||||||||||||||||||
| Variable Materials | 450 | |||||||||||||||||||||
| Variable direct labor | 120 | |||||||||||||||||||||
| Variable overhead | 200 | |||||||||||||||||||||
| Sales commission | 6% | of sales $s | ||||||||||||||||||||
| Fixed Mfg. overhead spending = applied | 35000 | |||||||||||||||||||||
| Fixed Selling & admin | 25000 | |||||||||||||||||||||
| Beginning Inventory | 252,000 | Overhead | Overhead | |||||||||||||||||||
| Qty. | 300 | Materials | Labor | Variable | Fxd | Sum | ||||||||||||||||
| Each | 450 | 120 | 200 | 70 | 840 | |||||||||||||||||
| $s | 135,000 | 36,000 | 60,000 | 21,000 | 252,000 | |||||||||||||||||
| Sales = production | ||||||||||||||||||||||
| Production | 500 | Overhead | Overhead | |||||||||||||||||||
| Qty. | 500 | Materials | Labor | Variable | Fxd | CoGManufactured | ||||||||||||||||
| Each | 450 | 120 | 200 | 70 | 840 | |||||||||||||||||
| $s | 225,000 | 60,000 | 100,000 | 35,000 | 420,000 | |||||||||||||||||
| Variable Income statement | Full absoprtion income statement [A] | |||||||||||||||||||||
| Sales | 500,000 | Sales | 500,000 | |||||||||||||||||||
| Variable costs & expenses | Cost of Goods Sold [units] | |||||||||||||||||||||
| Variable direct materials | 225,000 | Direct marterials | 225,000 | |||||||||||||||||||
| Variable direct labor | 60,000 | Direct labor | 60,000 | |||||||||||||||||||
| Variable mrg. Overhead | 100,000 | Mfg. overhead | 135,000 | + 100000+ 35000 | ||||||||||||||||||
| Variable CoGS | 385,000 | Total CoGS | 420,000 | |||||||||||||||||||
| Variable S&A Expenses | 30,000 | Gross Margin [Gross Profit] | 80,000 | |||||||||||||||||||
| Total variable costs & expenses | 415,000 | Fixed | Variable | |||||||||||||||||||
| Contribution Margin | 85,000 | Sales & Admin | 55,000 | 25000 | 30,000 | |||||||||||||||||
| Contribution Margin % | 17.0% | Total fixed expenses | 55,000 | |||||||||||||||||||
| Fixed expenses | ||||||||||||||||||||||
| Manufacturing | 35,000 | Net income | 25,000 | |||||||||||||||||||
| Sales & Admin | 25,000 | |||||||||||||||||||||
| Total fixed expenses | 60,000 | Same no change inventory $ | ||||||||||||||||||||
| no change in unit costs | ||||||||||||||||||||||
| Net income | 25,000 | |||||||||||||||||||||
| 5.0% | Full absoprtion income statement [B] | |||||||||||||||||||||
| Sales | 500,000 | |||||||||||||||||||||
| Operating leverage | 3.40 | |||||||||||||||||||||
| Cost of Goods Sold [+B +CoGM -End = CoGS] | ||||||||||||||||||||||
| +Beginning | 252,000 | |||||||||||||||||||||
| +CoG Manufactured | 420,000 | |||||||||||||||||||||
| Same if beginning & ending Invetory | - Ending | (252,000) | ||||||||||||||||||||
| is the same per unit & total | Total CoGS | 420,000 | ||||||||||||||||||||
| Gross Margin [Gross Profit] | 80,000 | |||||||||||||||||||||
| Sales & Admin | 55,000 | 0 | - 0 | |||||||||||||||||||
| Total fixed expenses | 55,000 | |||||||||||||||||||||
| Net income | 25,000 | |||||||||||||||||||||
| Same no change in ventory | ||||||||||||||||||||||
| no change in unit costs | ||||||||||||||||||||||
| 20000 | $ 7.50 | |||||||||||||||||||||
| 30000 | $ 5.00 | |||||||||||||||||||||
| $ 6.00 |
HCT Ch. 6 - Var/FAC Costing &P of &N, &D-&T, &F-&A
Inventory UP
Inventory no change
Inventory DOWN
Ch.6 VarFAC cost NEW
| Chapter 6 Variable/ FAC Costing | Chapter 6 Variable/ FAC Costing | Chapter 6 Variable/ FAC Costing | ||||||||||||||||||||||||||||||||||
| Variable selling varies with sales units | Used the same inventory cost as production cost in ths example | Variable selling varies with sales units | Used the same inventory cost as production cost in ths example | Variable selling varies with sales units | Used the same inventory cost as production cost in ths example | |||||||||||||||||||||||||||||||
| Variable manufacturing varies with units produced | Variable manufacturing varies with units produced | Variable manufacturing varies with units produced | ||||||||||||||||||||||||||||||||||
| Variable CoGS varies with units sold | Variable CoGS varies with units sold | Variable CoGS varies with units sold | ||||||||||||||||||||||||||||||||||
| Given | Computed | Given | Computed | Given | Computed | |||||||||||||||||||||||||||||||
| Data Set | Computed | Given | Variable cost/expense | Sell | Data Set | Computed | Given | Variable cost/expense | Sell | Data Set | Computed | Given | Variable cost/expense | Sell | ||||||||||||||||||||||
| Complex INV.no change | $s | $s | $ Per Unit | $ Per Unit | $ Per Unit | Complex Inv. Up | $s | $s | $ Per Unit | $ Per Unit | $ Per Unit | Complex Inv. DOWN | $s | $s | $ Per Unit | $ Per Unit | $ Per Unit | |||||||||||||||||||
| Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | |||||||||||||||||||||||||
| Units Produced | 5,000 | Units Produced | 5,100 | Units Produced | 4,800 | |||||||||||||||||||||||||||||||
| Units Sold | 5,000 | Units Sold | 5,000 | Units Sold | 5,000 | |||||||||||||||||||||||||||||||
| Sell Price per unit | $ 23.50 | Sell Price per unit | $ 23.50 | Sell Price per unit | $ 23.50 | |||||||||||||||||||||||||||||||
| Beginning Inventory/units | Beginning Inventory/units | Beginning Inventory/units | ||||||||||||||||||||||||||||||||||
| 2,500 | 2,500 | 2,500 | ||||||||||||||||||||||||||||||||||
| Expenses/Costs of Goods manufactured | Expenses/Costs of Goods manufactured | Expenses/Costs of Goods manufactured | ||||||||||||||||||||||||||||||||||
| Direct Materials | Cost | 11,500 | $ 2.300 | $ - 0 | Direct Materials | Cost | 11,730 | $ 2.300 | $ - 0 | Direct Materials | Cost | 11,040 | $ 2.300 | $ - 0 | ||||||||||||||||||||||
| Direct Labor | Cost | 9,800 | $ 1.960 | $ - 0 | Sum | Direct Labor | Cost | 9,996 | $ 1.960 | $ - 0 | Direct Labor | Cost | 9,408 | $ 1.960 | $ - 0 | |||||||||||||||||||||
| Manufacturing OH | Cost | 7,800 | 18,500 | $ 1.560 | $ 3.700 | $ 5.260 | Manufacturing OH | Cost | 7,956 | 18,500 | $ 1.560 | $ 3.627 | Manufacturing OH | Cost | 7,488 | 18,500 | $ 1.560 | $ 3.854 | ||||||||||||||||||
| Selling Expenses | Exp. | 2,500 | 7,500 | $ 0.500 | $ 1.500 | Selling Expenses | Exp. | 2,500 | 7,500 | $ 0.500 | $ 1.500 | Selling Expenses | Exp. | 2,500 | 7,500 | $ 0.500 | $ 1.500 | |||||||||||||||||||
| Admin. Expense | Exp. | 6,600 | $ 1.320 | Admin. Expense | Exp. | 6,600 | $ 1.320 | Admin. Expense | Exp. | 6,600 | $ 1.320 | |||||||||||||||||||||||||
| Totals: | 31,600 | 32,600 | $ 6.320 | $ 6.520 | $ 28.76 | Totals: | 32,182 | 32,600 | $ 6.320 | $ 6.447 | $ 23.50 | Totals: | 30,436 | 32,600 | $ 6.320 | $ 6.674 | $ 23.50 | |||||||||||||||||||
| Manufacturing Overhead | Manufacturing Overhead | Manufacturing Overhead | ||||||||||||||||||||||||||||||||||
| $ Per Unit | $ Per Unit | $ Per Unit | $ Per Unit | $ Per Unit | $ Per Unit | |||||||||||||||||||||||||||||||
| Costing Method for Inc.Statement/Inventoryèè | Variable Costing | FAC costing | Costing Method for Inc.Statement/Inventoryèè | Variable Costing | FAC costing | Costing Method for Inc.Statement/Inventoryèè | Variable Costing | FAC costing | ||||||||||||||||||||||||||||
| Cost of Production | Variable Costing Method | $ 5.820 | Cost of Production | Variable Costing Method | $ 5.820 | Cost of Production | Variable Costing Method | $ 5.820 | ||||||||||||||||||||||||||||
| FAC Cossting Method | $ 9.520 | FAC Cossting Method | $ 9.447 | FAC Cossting Method | $ 9.674 | |||||||||||||||||||||||||||||||
| Total MfgOH only/unit | $ 1.560 | $ 5.260 | Total MfgOH only/unit | $ 1.560 | $ 5.187 | Total MfgOH only/unit | $ 1.560 | $ 5.414 | ||||||||||||||||||||||||||||
| Units | Units | Units | ||||||||||||||||||||||||||||||||||
| Produced | 5,000 | CoG Manufactured | Produced | 5,100 | CoG Manufactured | Produced | 4,800 | CoG Manufactured | ||||||||||||||||||||||||||||
| Total | $ 29,100 | $ 47,600 | Total | $ 29,682 | $ 48,182 | Total | $ 27,936 | $ 46,436 | ||||||||||||||||||||||||||||
| Mfg.OH only | $ 7,800 | $ 26,300 | Mfg.OH only | $ 7,956 | $ 26,456 | Mfg.OH only | $ 7,488 | $ 25,988 | ||||||||||||||||||||||||||||
| Beginning Inventory Units | 1100 | $ 6,402 | $ 10,472 | Total cost | Beginning Inventory Units | 1100 | $ 5.820 | 9.447 | Total cost | Beginning Inventory Units | 1100 | $ 5.820 | 9.674 | Total cost | ||||||||||||||||||||||
| Units Sold | 5,000 | $ 1,716 | $ 5,786 | MOH only | Units Sold | 5,000 | $ 1,716 | $ 5,706 | MOH only | Units Sold | 5,000 | $ 1,716 | $ 5,956 | MOH only | ||||||||||||||||||||||
| Period Costs: | Variable | FAC | Period Costs: | Variable | FAC | Period Costs: | Variable | FAC | ||||||||||||||||||||||||||||
| Manufacturing OH | 18,500 | 0 | Manufacturing OH | 18,500 | 0 | Manufacturing OH | 18,500 | 0 | ||||||||||||||||||||||||||||
| Selling Expenses | 7,500 | 10,000 | Selling Expenses | 7,500 | 10,000 | Selling Expenses | 7,500 | 10,000 | ||||||||||||||||||||||||||||
| Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | ||||||||||||||||||||||||||||
| Total Period Costs | 32,600 | 16,600 | Total Period Costs | 32,600 | 16,600 | Total Period Costs | 32,600 | 16,600 | ||||||||||||||||||||||||||||
| Var. costing | FAC Costing | Var. costing | FAC Costing | Var. costing | FAC Costing | |||||||||||||||||||||||||||||||
| Sales | $ 117,500 | $ 117,500 | Sales | $ 117,500 | $ 117,500 | Sales | $ 117,500 | $ 117,500 | ||||||||||||||||||||||||||||
| Variable Cost of Sales | 29,100 | 29,100 | $ 5.820 | $ 9.520 | Variable Cost of Sales | 29,100 | 29,100 | Variable Cost of Sales | 29,100 | 29,100 | ||||||||||||||||||||||||||
| Fixed Mfg. OH | - 0 | 18,500 | 5,000 | 5,000 | Fixed Mfg. OH | - 0 | 18,137 | Fixed Mfg. OH | - 0 | 19,271 | ||||||||||||||||||||||||||
| CoGSold | 29,100 | 47,600 | $ 29,100 | $ 47,600 | CoGSold | 29,100 | 47,237 | CoGSold | 29,100 | 48,371 | ||||||||||||||||||||||||||
| Variable Selling Expense | 2,500 | - 0 | Variable Selling Expense | 2,500 | - 0 | Variable Selling Expense | 2,500 | - 0 | ||||||||||||||||||||||||||||
| Contribution Margin | 85,900 | Contribution Margin | 85,900 | Contribution Margin | 85,900 | |||||||||||||||||||||||||||||||
| Gross Profit | 69,900 | Gross Profit | 70,263 | Gross Profit | 69,129 | |||||||||||||||||||||||||||||||
| Fixed Mfg. OH | 18,500 | - 0 | Fixed Mfg. OH | 18,500 | - 0 | Fixed Mfg. OH | 18,500 | - 0 | ||||||||||||||||||||||||||||
| Variable Selling Expense | - 0 | 2,500 | Variable Selling Expense | - 0 | 2,500 | Variable Selling Expense | - 0 | 2,500 | ||||||||||||||||||||||||||||
| Fixed Selling Expense | 7,500 | 7,500 | Fixed Selling Expense | 7,500 | 7,500 | Fixed Selling Expense | 7,500 | 7,500 | ||||||||||||||||||||||||||||
| Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | Admin. Expense | 6,600 | 6,600 | ||||||||||||||||||||||||||||
| Operating expenses | 32,600 | 16,600 | No change in | Operating expenses | 32,600 | 16,600 | PUT | Operating expenses | 32,600 | 16,600 | TAKE | |||||||||||||||||||||||||
| Difference | Fixed MOH | Difference | Fixed MOHé | Difference | Fixed MOHê | |||||||||||||||||||||||||||||||
| Operating Income | 53,300 | 53,300 | - 0 | into Inventory | Operating Income | 53,300 | 53,663 | 363 | in Inventory | Operating Income | 53,300 | 52,529 | (771) | from Inventory | ||||||||||||||||||||||
| $s | $s | $s | ||||||||||||||||||||||||||||||||||
| Units | Var. costing | FAC Costing | Units | Var. costing | FAC Costing | Units | Var. costing | FAC Costing | ||||||||||||||||||||||||||||
| Beginning Inventory | 1100 | 6,402 | 10,472 | + | Beginning Inventory | 1100 | 6,402 | 10,392 | + | Beginning Inventory | 1100 | 6,402 | 10,642 | + | ||||||||||||||||||||||
| Produced | 5,000 | 29,100 | 47,600 | + | Produced | 5,100 | 29,682 | 48,182 | + | Produced | 4,800 | 27,936 | 46,436 | + | ||||||||||||||||||||||
| Sold | (5,000) | 29,100 | 47,600 | - | Sold | (5,000) | 29,100 | 47,237 | - | Sold | (5,000) | 29,100 | 48,371 | - | ||||||||||||||||||||||
| Ending Inventory | 1100 | 6,402 | 10,472 | = | Ending Inventory | 1200 | 6,984 | 11,337 | = | Ending Inventory | 900 | 5,238 | 8,707 | = | ||||||||||||||||||||||
| 0 | 0 | 0 | 582 | 945 | 363 | (1,164) | (1,935) | (771) | ||||||||||||||||||||||||||||
| Check [assuming beginning cost unit = produced cost per unit] | per unit | Check [assuming beginning cost unit = produced cost per unit] | per unit | Check [assuming beginning cost unit = produced cost per unit] | per unit | |||||||||||||||||||||||||||||||
| Produced | Sold | Diff | Fxd.MfgOH | $s | Produced | Sold | Diff | Fxd.MfgOH | $s | Produced | Sold | Diff | Fxd.MfgOH | $s | ||||||||||||||||||||||
| Produced Qty. - Sold Qty. | 5,000 | (5,000) | 0 | 3.700 | 0 | Produced Qty. - Sold Qty. | 5,100 | (5,000) | 100 | 3.627 | 363 | Produced Qty. - Sold Qty. | 4,800 | (5,000) | (200) | 3.854 | (771) | |||||||||||||||||||
| No change | FAV | UNFAV | ||||||||||||||||||||||||||||||||||
| Units to get cost aboveéééé | Slide 43 | |||||||||||||||||||||||||||||||||||
| + B + Prodcution to FG - Ending = CoGS below êêêê | ||||||||||||||||||||||||||||||||||||
| Using Above data | ||||||||||||||||||||||||||||||||||||
| Variable Income statement | Full absorption income statement [A] | |||||||||||||||||||||||||||||||||||
| Sales | 117,500 | Sales | 117,500 | No change | using | 77500 | ||||||||||||||||||||||||||||||
| in inventory | per unit | 70000 | ||||||||||||||||||||||||||||||||||
| Variable costs & expenses | Cost of Goods Sold [units] | 1.1071428571 | ||||||||||||||||||||||||||||||||||
| Variable direct materials | 11,500 | Direct materials | 11,500 | |||||||||||||||||||||||||||||||||
| Variable direct labor | 9,800 | Direct labor | 9,800 | using cost per unit | ||||||||||||||||||||||||||||||||
| Variable Mfg,. Overhead | 7,800 | Mfg. overhead | 26,300 | $ 5.260 | per unit | |||||||||||||||||||||||||||||||
| Variable CoGS | 29,100 | Total CoGS | 47,600 | |||||||||||||||||||||||||||||||||
| Variable S&A Expenses | 2,500 | Gross Margin [Gross Profit] | 69,900 | |||||||||||||||||||||||||||||||||
| Total variable costs & expenses | 31,600 | Fixed | Variable | |||||||||||||||||||||||||||||||||
| Contribution Margin | 85,900 | Sales & Admin | 16,600 | 14,100 | 2,500 | |||||||||||||||||||||||||||||||
| Contribution Margin % | 73.1% | Total fixed expenses | 16,600 | |||||||||||||||||||||||||||||||||
| Fixed expenses | ||||||||||||||||||||||||||||||||||||
| Manufacturing | 18,500 | Net income | 53,300 | |||||||||||||||||||||||||||||||||
| Sales & Admin | 14,100 | |||||||||||||||||||||||||||||||||||
| Total fixed expenses | 32,600 | Same if no change inventory $ | ||||||||||||||||||||||||||||||||||
| AND no change in unit costs from prior period to current period | ||||||||||||||||||||||||||||||||||||
| Net income | 53,300 | |||||||||||||||||||||||||||||||||||
| 45.4% | Full absorption income statement [B] | |||||||||||||||||||||||||||||||||||
| Sales | 117,500 | using | ||||||||||||||||||||||||||||||||||
| Operating leverage | 1.61 | |||||||||||||||||||||||||||||||||||
| Cost of Goods Sold [+B +CoGM -End = CoGS] | ||||||||||||||||||||||||||||||||||||
| +Beginning | 10,472 | The entire company | ||||||||||||||||||||||||||||||||||
| +CoG Manufactured | 47,600 | Sales | $ 500,000 | |||||||||||||||||||||||||||||||||
| Same if beginning & ending Inventory | - Ending | (10,472) | Vartiable Costs | 230,000 | ||||||||||||||||||||||||||||||||
| is the same per unit & total | Total CoGS | 47,600 | CM $ | 270,000 | ||||||||||||||||||||||||||||||||
| Gross Margin [Gross Profit] | 69,900 | Fixed Costs | 195,000 | |||||||||||||||||||||||||||||||||
| Net Operating Income | 75,000 | |||||||||||||||||||||||||||||||||||
| Sales & Admin | 16,600 | |||||||||||||||||||||||||||||||||||
| Total fixed expenses | 16,600 | 230,000 | ||||||||||||||||||||||||||||||||||
| 230,000 | ||||||||||||||||||||||||||||||||||||
| 230,000 | ||||||||||||||||||||||||||||||||||||
| Net income | 53,300 | 230,000 | ||||||||||||||||||||||||||||||||||
| 230,000 | ||||||||||||||||||||||||||||||||||||
| Same if no change inventory $ | 230,000 | V*A*R*I*A*B*L*E | F * A * C | |||||||||||||||||||||||||||||||||
| AND no change in unit costs from prior period to current period | 230,000 | Variable Format income statement | FAC Income statement | |||||||||||||||||||||||||||||||||
| Manufacturing | ||||||||||||||||||||||||||||||||||||
| Fixed OH | Fixed expense charged to IS as incurred | into inventory when made from inventory when sold; part of CoGS | ||||||||||||||||||||||||||||||||||
| Variable OH | into inventory when made from inventory when sold; part of CoGS | into inventory when made from inventory when sold; part of CoGS | ||||||||||||||||||||||||||||||||||
| Direct materials | into inventory when made/purchased THEN from inventory when sold; part of CoGS | into inventory when made/purchased THEN from inventory when sold; part of CoGS | ||||||||||||||||||||||||||||||||||
| Direct labor | into inventory when incurred/made THEN from inventory when sold; part of CoGS | into inventory whenincurred/made THEN from inventory when sold; part of CoGS | ||||||||||||||||||||||||||||||||||
| Sales & Administration | ||||||||||||||||||||||||||||||||||||
| Fixed | Charged to IS as incurred | Charged to IS as incurred | ||||||||||||||||||||||||||||||||||
| Variable | Charged to IS as incurred But shown as variable exepnse above Contribution Margin | Charged to IS as incurred But included as Period expense below Gross Margin [or Gross Profit] | ||||||||||||||||||||||||||||||||||
| Types of Costs & Expenses | ||||||||||||||||||||||||||||||||||||
| Natural | By Nature of the Expense: Salaries, Utilities, Insurance | A | ||||||||||||||||||||||||||||||||||
| Functional | By Function, department, Organization Structure, Selling, Engineering, QA, Accounting… | B | ||||||||||||||||||||||||||||||||||
| Variable | Varies directly with Sales or Production: Direct Labor, Sales Commissions... | C | ||||||||||||||||||||||||||||||||||
| Fixed | Does NOT vary with Sales or Production | D | ||||||||||||||||||||||||||||||||||
| Direct | Traceable to a cost Object [such as a Product or capital project] | E | ||||||||||||||||||||||||||||||||||
| Indirect | Not Traceable but can be assigned via selected measure [e..g.to product via DL hrs.] | F | ||||||||||||||||||||||||||||||||||
| Conversion Costs of Product | Direct Labor & manufacturing overhead | G | ||||||||||||||||||||||||||||||||||
| Prime costs | Direct Material & Direct Labor | H | ||||||||||||||||||||||||||||||||||
| Common costs | Costs to support a group of cost objects | I | ||||||||||||||||||||||||||||||||||
| Traceable costs | Traceable to a cost Object but extends beyond product costs such as Traceable ABC costs | G | ||||||||||||||||||||||||||||||||||
| GE GEOGRAPHIC REVENUES | ||||||||||||||||||||||||||||||||||||
| V% | ||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | 2015 | 2014 | 2013 | 2015-2014 | 2014-2013 | |||||||||||||||||||||||||||||||
| U.S. | $ | 53.2 | $ | 51.1 | $ | 49.4 | 4 % | 4 % | ||||||||||||||||||||||||||||
| Non-U.S. | ||||||||||||||||||||||||||||||||||||
| Europe | 16.8 | 18.4 | 18.2 | |||||||||||||||||||||||||||||||||
| Asia | 19.3 | 20.2 | 20.9 | |||||||||||||||||||||||||||||||||
| Americas | 12 | 11.8 | 11.3 | |||||||||||||||||||||||||||||||||
| Middle East and Africa | 16 | 15.6 | 13.5 | |||||||||||||||||||||||||||||||||
| Total Non-U.S. | 64.1 | 66 | 63.9 | (3)% | 3 % | |||||||||||||||||||||||||||||||
| Total | $ | 117.4 | $ | 117.2 | $ | 113.2 | - % | 3 % | ||||||||||||||||||||||||||||
| Non-U.S. Revenues as a % of Consolidated Revenues | 55% | 56% | 56% | |||||||||||||||||||||||||||||||||
| Per Unit | ||||||||||||||||||||||||||||||||||||
| SP | $200.00 | $4,600,000 | ||||||||||||||||||||||||||||||||||
| Var. costs M | $60.00 | $1,380,000 | ||||||||||||||||||||||||||||||||||
| Var. costs L | $22.00 | $506,000 | ||||||||||||||||||||||||||||||||||
| Var. costs Mfg. OH | $28.00 | $644,000 | ||||||||||||||||||||||||||||||||||
| Var.Sell. Comm. | 4% | $8.00 | $184,000 | $2,714,000 | ||||||||||||||||||||||||||||||||
| $1,886,000 | ||||||||||||||||||||||||||||||||||||
| Beg. Inventory Qty. | 6,000 | all | ||||||||||||||||||||||||||||||||||
| Make | 25,000 | same var. | ||||||||||||||||||||||||||||||||||
| Sell | 23,000 | unit cost | ||||||||||||||||||||||||||||||||||
| End Qty | 8,000 | |||||||||||||||||||||||||||||||||||
| Fxd MOH/unit | ||||||||||||||||||||||||||||||||||||
| Fxd. Mfg. OH | $500,000 | $20.00 | ||||||||||||||||||||||||||||||||||
| Fxd. SG&A | $1,050,000 | $1,550,000 | ||||||||||||||||||||||||||||||||||
| Profit | $336,000 | |||||||||||||||||||||||||||||||||||
| Var format | ||||||||||||||||||||||||||||||||||||
| Begin MOH in Inventory | $120,000 | 6,000 | 23,000 | |||||||||||||||||||||||||||||||||
| Added FOH | $500,000 | $20.00 | $20.00 | |||||||||||||||||||||||||||||||||
| End FOH | -$160,000 | 120,000 | 460,000 | |||||||||||||||||||||||||||||||||
| to CoGS | $460,000 | ($500,000) | ||||||||||||||||||||||||||||||||||
| (40,000) | ||||||||||||||||||||||||||||||||||||
| GAAP/FAC | Var format | |||||||||||||||||||||||||||||||||||
| Sales | $4,600,000 | $4,600,000 | ||||||||||||||||||||||||||||||||||
| CoGS | ||||||||||||||||||||||||||||||||||||
| Var. costs M | $1,380,000 | $1,380,000 | Var. costs M | |||||||||||||||||||||||||||||||||
| Var. costs L | $506,000 | $506,000 | Var. costs L | |||||||||||||||||||||||||||||||||
| Var. costs Mfg. OH | $644,000 | $644,000 | Var. costs Mfg. OH | |||||||||||||||||||||||||||||||||
| Fxd. MOH | 460,000 | $184,000 | Var Selling | |||||||||||||||||||||||||||||||||
| Total CoGS | $2,990,000 | $2,714,000 | tota Var. | |||||||||||||||||||||||||||||||||
| Gross Profit | $1,610,000 | $1,886,000 | Contrib Margin | |||||||||||||||||||||||||||||||||
| SG&A | ||||||||||||||||||||||||||||||||||||
| Var Sell | $184,000 | $ 500,000 | Fxd. MOH | |||||||||||||||||||||||||||||||||
| Fxd. SG&A | $1,050,000 | $ 1,050,000 | Fxd. SG&A | |||||||||||||||||||||||||||||||||
| SG&A | $1,234,000 | $ 1,550,000 | ||||||||||||||||||||||||||||||||||
| Oper.Income | $376,000 | $ 336,000 |
ACC220---HCT---&P of &N---&D,&T---&F,&A
Inventory UP
Inventory no change
Inventory DOWN
Ch.5CVP options NO ACC220
| Rider University | ||||||||
| Harold Tamburro | ||||||||
| Cost-Volume-Profit Analysis | CVP Analysis | |||||||
| Data Section | ClassCo, Inc | US$s | Varies with | |||||
| Base Case | 2010 | % | Sales$ [S] or Prodn. Units [P] | |||||
| Fixed | Variable* | |||||||
| Production Costs | ||||||||
| Direct Materials | $ 4.30 | Production | ||||||
| Direct Labor | 4.70 | Production | ||||||
| Factory OH | $ 225,000 | 3.00 | ||||||
| Selling Expenses | ||||||||
| Sales Salaries & Commissions | 97,000 | 0.80 | 4.00% | Sales | ||||
| Advertising | 47,500 | comm. is a %, not amount | ||||||
| Misc.Selling Expense | 16,200 | |||||||
| General Expenses | ||||||||
| Office Salaries | 87,000 | |||||||
| Supplies | 12,300 | 1.25 | Sales | |||||
| Misc.. General Expense | 15,000 | |||||||
| Total | $ 500,000 | $ 14.05 | 13.25 | |||||
| + 4% of sales | ||||||||
| Selling Price | $ 20.00 | |||||||
| Target Income | $ 200,000 | |||||||
| Expected Unit Sales | BASE | 90,000 | ||||||
| * per unit | ||||||||
| ClassCo, Inc | ||||||||
| Contribution Margin | ||||||||
| Per Unit | ||||||||
| Sell Price | $ 20.00 | |||||||
| Variable: Cost & Expenses | ||||||||
| Costs: | Direct Materials | $ 4.30 | ||||||
| Direct Labor | 4.70 | |||||||
| Factory OH | 3.00 | |||||||
| Total Variable Costs | $ 12.00 | |||||||
| Expenses: | Sales Salaries & Commissions | $ 0.80 | ||||||
| Supplies | 1.25 | |||||||
| Total Variable Expenses | $ 2.05 | |||||||
| Total: Base:Variable Cost & Expenses | $ 14.05 | |||||||
| Contribution per unit | $ | $ 5.95 | ||||||
| Contribution Margin (%) | % | 29.8% | ||||||
| ClassCo, Inc | ||||||||
| Profits | ||||||||
| BASE | Profit at Expected (Base) Volume | |||||||
| Expected Unit Sales | 90,000 | |||||||
| Contribution per unit | $ 5.95 | |||||||
| Contribution Amount | $ 535,500 | |||||||
| Less: Fixed Cost/Expense | $ 500,000 | |||||||
| Profit at Expected Volume | $ 35,500 | |||||||
| BE | Breakeven (Income = 0) | Per Unit | Amount$ | |||||
| Sell Price | $ 20.00 | $ 1,680,680 | ||||||
| Total: Base:Variable Cost & Expenses | $ 14.05 | $ 1,180,678 | ||||||
| Contribution | $ 5.95 | $ 500,002 | ||||||
| Fixed Costs & Expenses | $ 5.95 | $ 500,000 | ||||||
| BE Units | 84,034 | |||||||
| Profit | (BE → Profit = 0) | $ - 0 | $ - 0 | |||||
| TARGET | Unit Sales to meet Target Income | Per Unit | Amount$ | |||||
| Sell Price | $ 20.00 | $ 2,352,940 | ||||||
| Total: Base:Variable Cost & Expenses | $ 14.05 | 1,652,940 | ||||||
| Contribution | $ 5.95 | 700,000 | ||||||
| Fixed Costs & Expenses | $ 4.25 | 500,000 | ||||||
| Target Income | $ 1.70 | 200,000 | ||||||
| Total Fixed Costs & Exp. + Target Income | $ 5.95 | $ 700,000 | ||||||
| Target Units | 117,647 | $ 2,352,940 | ||||||
| ClassCo, Inc | ||||||||
| "What if" | ||||||||
| President | a. | Cut price by 10% | ||||||
| which increases unit volume 30% | ||||||||
| Sales Mngr. | b. | Put Sales personnel on all commissions which | ||||||
| reduces fixed salaries by $77,000 | ||||||||
| and increases variable sales expenses per unit by $1.95 | ||||||||
| volume would increase by 30% | ||||||||
| Production VP | c. | Raise quality resulting in increase direct materials per unit of $1.00 | ||||||
| increase in direct labor $0.50 | ||||||||
| increase fixed factory OH by $40,000 | ||||||||
| and double advertising →→ can raise price per unit by $2.00 | ||||||||
| and increase unit sales 35% | ||||||||
| Controller | d. | double commissions % | ||||||
| triple advertisng | ||||||||
| increase unit sales by 40% | ||||||||
| President: | ||||||||
| a. | Cut price by 10% | |||||||
| which increases unit volume 30% | ||||||||
| Selling Price | 20.00 | per unit | ||||||
| a. Increase [decrease.] Unit SP | (2.00) | 10% | ||||||
| a. New unit SP | 18.00 | per unit | ||||||
| Total: Base:Variable Cost & Expenses | 14.05 | per unit | ||||||
| a. Increase [decrease] Variable Costs | - 0 | |||||||
| a. Increase [decrease] Variable Expenses | (0.08) | |||||||
| a. Variable: Cost & Expenses | 13.97 | per unit | ||||||
| a. Contribution Margin Amount | 4.03 | per unit | ||||||
| Expected Unit Sales | 90,000 | |||||||
| a. Increase in Unit Sales | 27,000 | 30% | ||||||
| a. Unit Sales | 117,000 | |||||||
| a. Contribution Margin Amount | 471,510 | |||||||
| Total Expected Fxa. Costs & Exp. | 500,000 | |||||||
| a. Increase[decrease.] in Fixed Factory OH | - 0 | |||||||
| a. Increase [decrease.] in Fixed Selling Exp | - 0 | |||||||
| a. Increase [decrease.] in Advertising | - 0 | |||||||
| a. Increase[decrease.]in Fixed General Exp. | - 0 | |||||||
| a. Fixed Costs & Expenses | 500,000 | |||||||
| a. Profit | (28,490) | |||||||
| Scenario a. better/(worse) | ||||||||
| than expected | (63,990) | |||||||
| Sales Manager | Put Sales personnel on all commissions which | |||||||
| b. | reduces fixed salaries by $77,000 | |||||||
| and increases variable sales expenses per unit by $1.95 | ||||||||
| volume would increase by 30% | ||||||||
| Selling Price | 20.00 | per unit | ||||||
| b. Increase [decrease] Unit SP | - 0 | |||||||
| b. New unit SP | 20.00 | per unit | ||||||
| Total: Base:Variable Cost & Expenses | 14.05 | per unit | ||||||
| b. Increase [decrease] Variable Costs | - 0 | |||||||
| b. Increase [decrease] Variable Expenses | 1.95 | |||||||
| b. Variable: Cost & Expenses | 16.00 | per unit | ||||||
| b. Contribution Margin Amount | 4.00 | per unit | ||||||
| Expected Unit Sales | 90,000 | |||||||
| b. Increase in Unit Sales | 27,000 | 30% | % {'Right' function} | |||||
| b. Unit Sales | 117,000 | |||||||
| b. Contribution Margin Amount | 468,000 | |||||||
| Total Expected Fxb. Costs & Exp. | 500,000 | |||||||
| b. Increase[decrease.] in Fixed Factory OH | 0 | |||||||
| b. Increase [decrease.] in Fixed Selling Exp | (77,000) | |||||||
| b. Increase [decrease.] in Advertising | 0 | |||||||
| b. Increase[decrease.]in Fixed General Exp. | 0 | |||||||
| b. Fixed Costs & Expenses | 423,000 | |||||||
| b. Profit | 45,000 | |||||||
| Scenario b. better/(worse) | ||||||||
| than expected | 9,500 | |||||||
| Production VP | Raise quality resulting in increase direct materials per unit of $1.00 | |||||||
| c. | increase in direct labor $0.50 | |||||||
| increase fixed factory OH by $40,000 | ||||||||
| and double advertising →→ can raise price per unit by $2.00 | ||||||||
| and increase unit sales 35% | ||||||||
| Selling Price | 20.00 | per unit | ||||||
| c. Increase [decrease] Unit SP | 2.00 | Risk | ||||||
| c. New unit SP | 22.00 | per unit | ||||||
| Total: Base:Variable Cost & Expenses | 14.05 | per unit | ||||||
| c. Increase [decrease] Variable Costs | 1.50 | |||||||
| c. Increase [decrease] Variable Expenses | 0.08 | |||||||
| c. Variable: Cost & Expenses | 15.63 | per unit | ||||||
| c. Contribution Margin Amount | 6.37 | per unit | ||||||
| Expected Unit Sales | 90,000 | |||||||
| c. Increase in Unit Sales | 31,500 | 35% | ||||||
| c. Unit Sales | 121,500 | |||||||
| c. Contribution Margin Amount | 773,955 | |||||||
| Total Expected Fxd. Costs & Exp. | 500,000 | |||||||
| c. Increase[decrease.] in Fixed Factory OH | 40,000 | |||||||
| c. Increase [decrease.] in Fixed Selling Exp | - 0 | 0 | ||||||
| c. Increase [decrease.] in Advertising | 47,500 | |||||||
| c. Increase[decrease.]in Fixed General Exp. | - 0 | |||||||
| c. Fixed Costs & Expenses | 587,500 | Risk | ||||||
| c. Profit | 186,455 | |||||||
| Scenario c. better/(worse) | ||||||||
| than expected | 150,955 | |||||||
| Controller | double commissions % | |||||||
| d. | triple advertisng | |||||||
| increase unit sales by 40% | 40% | |||||||
| Selling Price | 20.00 | per unit | ||||||
| d. Increase [decreaseease] Unit SP | - 0 | |||||||
| d. New unit SP | 20.00 | per unit | ||||||
| Total: Base:Variable Cost & Expenses | 14.05 | per unit | ||||||
| d. Increase [decrease] Variable Costs | - 0 | |||||||
| d. Increase [decrease] Variable Expenses | 0.80 | |||||||
| d. Variable: Cost & Expenses | 14.85 | per unit | ||||||
| d. Contribution Margin Amount | 5.15 | per unit | ||||||
| Expected Unit Sales | 90,000 | |||||||
| d. Increase in Unit Sales | 36,000 | 40% | % {'Right' function} | |||||
| d. Unit Sales | 126,000 | |||||||
| d. Contribution Margin Amount | 648,900 | |||||||
| Total Expected Fxd. Costs & Exp. | 500,000 | |||||||
| d. Increase[decrease.] in Fixed Factory OH | - 0 | |||||||
| d. Increase [decrease.] in Fixed Selling Exp | - 0 | 0 | ||||||
| d. Increase [decrease.] in Advertising | 95,000 | |||||||
| d. Increase[decrease.]in Fixed General Exp. | - 0 | |||||||
| d. Fixed Costs & Expenses | 595,000 | |||||||
| d. Profit | 53,900 | $ 35,500 | Base | |||||
| Scenario d. better/(worse) | ||||||||
| than expected | 18,400 | |||||||
| Breakeven Chart | Production | |||||||
| Data Section | Units = Sales | Profit/[Loss] | ||||||
| Misc.. General Expense | 0 | $ (500,000) | ||||||
| Type► | 10,000 | $ (440,500) | ||||||
| Contribution | 20,000 | $ (381,000) | ||||||
| Fixed costs | per unit | 30,000 | $ (321,500) | |||||
| $ 500,000 | $ 5.95 | 40,000 | $ (262,000) | |||||
| 50,000 | $ (202,500) | |||||||
| 60,000 | $ (143,000) | |||||||
| 70,000 | $ (83,500) | |||||||
| 80,000 | $ (24,000) | |||||||
| 90,000 | $ 35,500 | |||||||
| 100,000 | $ 95,000 | |||||||
| 110,000 | $ 154,500 | |||||||
| 120,000 | $ 214,000 | |||||||
| ClassCo, Inc | BASE | $ 35,500 | ||||||
| Profitability of Various Scenarios | TARGET | $ 200,000 | ||||||
| President: | $ (28,490) | |||||||
| Sales Manager | $ 45,000 | |||||||
| Production VP | $ 186,455 | |||||||
| Controller | $ 53,900 | |||||||
| Degree of operating leverage | ||||||||
| Target Operating Income | 150,000 | |||||||
| Target Operating Income % | 0.123 | 150,000/1,222,893 | ||||||
| Contribution Margin % | 0.593 | |||||||
| DOL | 4.833 | 59.29% / 12.27 % | ||||||
| For every 1% decrease in sales 4.8% decrease | ||||||||
| in Operating Income | ||||||||
| Target sales | 1,222,893 | |||||||
| Less 1% | 1,210,664 | |||||||
| X Contrib % | 59.3% | |||||||
| New Contrib $s | 717,751 | |||||||
| Lees Fixed $s | 575,000 | |||||||
| New Op. Income $s | 142,751 | |||||||
| Decrease in Op. Inc. $s | 7,249 | |||||||
| % decrease in OP. Inc. | 4.83% | |||||||
HCT---&P of &N---&D,&T---&F,&A
round,0
Profitability of Student Name Manufacturing with Different Management Actions: $s
Profitability of Various ScenariosBASE TARGET President: Sales Manager Production VP Controller 35499.999999999884 200000 -28490.000000000058 45000 186454.99999999988 53899.999999999767
Student Name Manufacturing: Breakeven & Profit at Various Unit Volumes
Studentr Manufacturing: Breakeven & Profit at Various Unit Volumes0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 110000 120000 -500000 -440500 -381000 -321500 -262000.00000000003 -202500.00000000006 -143000.00000000006 -83500.000000000058 -24000.000000000058 35499.999999999884 94999.999999999884 154499.99999999988 213999.99999999988
Units Produced & Sold
2
3
6
1
7
5
4
1
6
8
4
2
3
5
7
9
11
10
cell ref.
increase by 10000 using formula
text box ▼
8
Ch.5 old -2-Var P&L
| This is NOT GAAP | ||
| Manufacturing Company; contribution format | ||
| This in Managerial, not Financial Statement | ||
| ClassCo, Inc. | ||
| Statement of Income for PE: xxxxxxx | ||
| $ | ||
| Sales | 10,300 | |
| Sale discounts, returns & allowances | 300 | |
| Net Sales | 10,000 | |
| CoGS | ||
| Direct materials | 3,000 | |
| Direct Labor | 1,000 | |
| Variable Overhead | 2,000 | |
| Variable manufacturing costs | 6,000 | |
| Gross Margin | 4,000 | |
| Variable Sales & administration | 700 | |
| Contribution Margin | 3,300 | |
| Fixed Costs & Expenses | ||
| Fixed Manufacturing Costs | 1,700 | |
| Fixed Sales & Administrative Costs | 1,200 | |
| Total Fixed Operating & Manufacturing | 2,900 | |
| Operating Income | 400 |
HCT---&P of &N---&D,&T---&F,&A
Ch.5old -2- least sq,2 old
| A | B | C | D | E | F | |||
| A6 | Actual | Actual | Modeled | Modeled | ||||
| A7 | Units | $ | $ | % accuracy | Differnace | |||
| A8 | 1800 | 10113 | 11,261 | 11.4% | 1,148 | 0.7737167625 | RSQ | |
| A9 | 4000 | 12691 | 16,639 | 31.1% | 3,948 | |||
| A10 | 2100 | 10905 | 11,994 | 10.0% | 1,089 | |||
| A11 | 2000 | 12949 | 11,750 | -9.3% | (1,199) | |||
| A12 | 3000 | 15334 | 14,194 | -7.4% | (1,140) | |||
| A13 | 7000 | 21455 | 23,972 | 11.7% | 2,517 | 2.4444 | Slope | B |
| A14 | 5000 | 21270 | 19,083 | -10.3% | (2,187) | $ 6,861 | Intercept | A |
| A15 | 5000 | 19930 | 19,083 | -4.2% | (847) | |||
| A16 | 5428 | 21860 | 20,129 | -7.9% | (1,731) | |||
| A17 | 3000 | 18383 | 14,194 | -22.8% | (4,189) | |||
| A18 | 2000 | 9830 | 11,750 | 19.5% | 1,920 | |||
| A19 | 2000 | 11081 | 11,750 | 6.0% | 669 | |||
| X | sum►► | (0) | 4222 | |||||
| mean | 3527.3333333333 | 1727 | std deviation | |||||
| 900 | 14500 | 13542.8571428571 | 957.1428571428570000 | |||||
| 375 | 6600 | -5642.8571428571 | 957.1428571429 | |||||
| -525 | -7900 | 15.0476190476 |
HCT---&P of &N---&D,&T---&F,&A
1800 4000 2100 2000 3000 7000 5000 5000 5428 3000 2000 2000 10113 12691 10905 12949 15334 21455 21270 19930 21860 18383 9830 11081
10113 12691 10905 12949 15334 21455 21270 19930 21860 18383 9830 11081 2310 2453 2641 2874 3540 4861 5432 5268 4628 3720 2106 2495
2310 2453 2641 2874 3540 4861 5432 5268 4628 3720 2106 2495 10932.38833071419 11466.99708102186 12169.839354153622 13040.915150109477 15530.77128790604 20469.359813475501 22604.056291976758 21990.938564351178 19598.284017519643 16203.705379202409 10169.729693911639 11624.01503565768
Actual data
Pearson product moment correlation coefficient Assumes Normal Distribution Sum of the products of the difference from the mean for x and y divided by the square root of the product of the sum the squares of the difference from the mean for x time same sum for Y
Ch.5 old -2- Hi-Low old
| High-Low Method | ||||||||
| Data Set # 1 | Data Set # 2 | Data Set # 3 | ||||||
| Units | Total Cost | Units | Total Cost | Units | Total Cost | |||
| 12,000 | $ 120,000 | 14,000 | $ 336,000 | 26,200 | $ 552,000 | $ 552,029 | 0.01% | |
| 11,000 | $ 100,600 | 10,800 | $ 279,800 | 19,900 | $ 459,000 | $ 307,029 | -33.11% | |
| 9,800 | $ 99,000 | 9,600 | $ 277,400 | 18,500 | $ 455,800 | $ 689,629 | 51.30% | |
| 7,700 | $ 82,000 | 7,850 | $ 230,600 | 15,000 | $ 379,200 | $ 379,229 | 0.01% | |
| 10,400 | $ 97,500 | 10,000 | $ 271,700 | 18,700 | $ 445,900 | $ 288,514 | -35.30% | |
| Hi Units | 12,000 | 14,000 | 26,200 | |||||
| Low Units | 7,700 | 7,850 | 15,000 | |||||
| Hi $ | 120,000 | 336,000 | 552,000 | |||||
| Low $ | 82,000 | 230,600 | 379,200 | |||||
| ∆ $ | 38,000 | 105,400 | 172,800 | |||||
| ∆ Units | 4,300 | 6,150 | 11,200 | |||||
| Var Cost U. | $ 8.84 | $ 17.14 | $ 15.43 | |||||
| Low Units x Var. Cost | 68,000 | 134,500 | 231,400 | |||||
| Fxied costs | 14,000 | 96,100 | 147,800 | |||||
| Hi Units x Var. Cost | 106,000 | 239,900 | 404,200 | |||||
| Fxied costs | 14,000 | 96,100 | 147,800 | |||||
hct---&P of &N---&D,&T---&F,&A
Ch.5old -2- least sq.1
| Problem 5.5 | |||||||||
| A | B | C | D | E | F | ||||
| A6 | Actual | Actual | Modeled | Modeled | $ | ||||
| A7 | Units | $ | $ | % accuracy | Difference | ||||
| A8 | 2310 | 10113 | 10,932 | 8.1% | 819 | 0 | |||
| A9 | 2453 | 12691 | 11,467 | -9.6% | (1,224) | 2578 | |||
| A10 | 2641 | 10905 | 12,170 | 11.6% | 1,265 | 792 | |||
| A11 | 2874 | 12949 | 13,041 | 0.7% | 92 | 0.916762505 | RSQ | 2836 | |
| A12 | 3540 | 15334 | 15,531 | 1.3% | 197 | 5221 | |||
| A13 | 4861 | 21455 | 20,469 | -4.6% | (986) | 3.7385 | Slope | B | 11342 |
| A14 | 5432 | 21270 | 22,604 | 6.3% | 1,334 | $ 2,296 | Intercept | A | 11157 |
| A15 | 5268 | 19930 | 21,991 | 10.3% | 2,061 | 9817 | |||
| A16 | 4628 | 21860 | 19,598 | -10.3% | (2,262) | 11747 | |||
| A17 | 3720 | 18383 | 16,204 | -11.9% | (2,179) | 8270 | |||
| A18 | 2106 | 9830 | 10,170 | 3.5% | 340 | -283 | |||
| A19 | 2495 | 11081 | 11,624 | 4.9% | 543 | 968 | |||
| X | sum►► | (0) | 4595 | ||||||
| 42328 | mean | 3527.3333333333 | 1229 | std deviation | |||||
| Hi-low vs. least squares | |||||||||
| Qty: | $s | ||||||||
| 2106 | $ 9,830 | ||||||||
| 5432 | $ 21,860 | ||||||||
| Change | 3326 | $ 12,030 | |||||||
| Varaible per uniot | 3.62 | ||||||||
| Fixed | $ 2,213 | $ 2,213 | |||||||
| Qty | Hi-low | Least Sq's | Diff.$s | ||||||
| 2310 | $ 10,568 | 10,932 | $ (365) | ||||||
| 2453 | $ 11,085 | 11,467 | $ (382) | ||||||
| 2641 | $ 11,765 | 12,170 | $ (405) | ||||||
| 2874 | $ 12,608 | 13,041 | $ (433) | ||||||
| 3540 | $ 15,017 | 15,531 | $ (514) | ||||||
| 4861 | $ 19,795 | 20,469 | $ (675) | ||||||
| 5432 | $ 21,860 | 22,604 | $ (744) | ||||||
| 5268 | $ 21,267 | 21,991 | $ (724) | ||||||
| 4628 | $ 18,952 | 19,598 | $ (646) | ||||||
| 3720 | $ 15,668 | 16,204 | $ (536) | ||||||
| 2106 | $ 9,830 | 10,170 | $ (340) | ||||||
| 2495 | $ 11,237 | 11,624 | $ (387) | ||||||
| $ 179,651 | $ 185,801 | $ (6,150) | |||||||
| Average difference per period | 3.4% |
HCT---&P of &N---&D,&T---&F,&A
2310 2453 2641 2874 3540 4861 5432 5268 4628 3720 2106 2495 10113 12691 10905 12949 15334 21455 21270 19930 21860 18383 9830 11081
10113 12691 10905 12949 15334 21455 21270 19930 21860 18383 9830 11081 2310 2453 2641 2874 3540 4861 5432 5268 4628 3720 2106 2495
y = 274.38x + 13700
2310 2453 2641 2874 3540 4861 5432 5268 4628 3720 2106 2495 10932.38833071419 11466.99708102186 12169.839354153622 13040.915150109477 15530.77128790604 20469.359813475501 22604.056291976758 21990.938564351178 19598.284017519643 16203.705379202409 10169.729693911639 11624.01503565768
Actual data
Pearson product moment correlation coefficient Assumes Normal Distribution Sum of the products of the difference from the mean for x and y divided by the square root of the product of the sum the squares of the difference from the mean for x time same sum for Y
Conversion Costs Transferred OUT:
Weighted Average:
Beginnig Costs
5,575
Period Costs
350,900
Total
356,475
Equivalent units
4,900
per Equivalent Unit
72.75
$
Completed: To next Department or FG
4,800
349,200
Ending in Department
400 = 100 Eq.units
7,275
356,475
Data Set:
#3
Support DepartmentsOperating Departments
MaintenanceIT SupportMachiningAssemblyTotal:
abFunctional Spending $s600,000$ 116,000$ 400,000$ 200,000$ 1,316,000$
acUnits: Hours1,600 2,400 4,000 8,000
ad%20.0%30.0%50.0%100.0%
Without support functions37.5%62.5%
aeComputer Hours20016002002,000
af%10.0%80.0%10.0%100.0%
Without support functions88.9%11.1%
Data Set:
#4
Direct Method of Overhead Allocation
Allocate from Support direct to operating
agTotal Operating depts. Hours6,400 ac operating depts.
ahsupport cost-rate per hour
Maintenance
93.75$ + 'ab' Maint. / 'ac' opera. hours
aisupport cost-rate per hourAssembly64.44 + 'ab' IT. / 'ac' opera. hours
Allocated support costs
Maintenance
IT Support
ajMachining225,000 103,111 + ac opera * ah , ai
akAssembly375,000 12,889 + ac mach * ah , ai
alTotal600,000 116,000
Direct Fixed OH costs
Direct
AllocatedTotalRate
az+ab + ajMachining400,000 328,111 728,111 303.38$
ax+ab + akAssembly200,000 387,889 587,889 146.97$
aw+ az + axTotal600,000 716,000 1,316,000
Sheet1
| Racing Bicycle Company | |||
| Contribution Income Statement | |||
| For the Month of June | |||
| Sales (500 bicycles) | $ 250,000 | ||
| Less: Variable expenses | 150,000 | ||
| Contribution margin | 100,000 | ||
| Less: Fixed expenses | 80,000 | ||
| Net operating income | $ 20,000 | ||
Sheet2
Sheet3
Sales (500 bicycles)250,000$
Less: Variable expenses150,000
Contribution margin100,000
Less: Fixed expenses80,000
Net operating income20,000$
Racing Bicycle Company
Contribution Income Statement
For the Month of June
Sheet1
| Income 300 units | Income 400 units | Income 500 units | ||||
| Sales | $ 150,000 | $ 200,000 | $ 250,000 | |||
| Less: variable expenses | 90,000 | 120,000 | 150,000 | |||
| Contribution margin | $ 60,000 | $ 80,000 | $ 100,000 | |||
| Less: fixed expenses | 80,000 | 80,000 | 80,000 | |||
| Net operating income | $ (20,000) | $ - 0 | $ 20,000 |
&A
Page &P
Income
300 units
Income
400 units
Income
500 units
Sales150,000$ 200,000$ 250,000$
Less: variable expenses90,000 120,000 150,000
Contribution margin60,000$ 80,000$ 100,000$
Less: fixed expenses80,000 80,000 80,000
Net operating income(20,000)$ -$ 20,000$
Sheet1
| Income 300 units | Income 400 units | Income 500 units | ||||
| Sales | $ 150,000 | $ 200,000 | $ 250,000 | |||
| Less: variable expenses | 90,000 | 120,000 | 150,000 | |||
| Contribution margin | $ 60,000 | $ 80,000 | $ 100,000 | |||
| Less: fixed expenses | 80,000 | 80,000 | 80,000 | |||
| Net operating income | $ (20,000) | $ - 0 | $ 20,000 |
&A
Page &P
Sheet1
| SureStarts [A] | LongLifes [B] | Total | |||||||||
| Sales | $ 31,300,000 | $ 18,700,000 | $ 50,000,000 | ||||||||
| Direct costs | |||||||||||
| Direct material | 9,000,000 | 6,000,000 | 15,000,000 | ||||||||
| Direct labor | 7,000,000 | 5,000,000 | 12,000,000 | ||||||||
| Shipping | 2,000,000 | 1,000,000 | 3,000,000 |
Sheet2
Sheet3
SureStarts [A]LongLifes [B]Total
Sales31,300,000$ 18,700,000$ 50,000,000$
Direct costs
Direct material9,000,000 6,000,000 15,000,000
Direct labor7,000,000 5,000,000 12,000,000
Shipping2,000,000 1,000,000 3,000,000
Product A: SureStart1.Requires no new design resources.2.800,000 batteries ordered with 4,000 separate orders.
3.Each SureStartrequires 36 minutes of machine
time for a total of 480,000 machine-hours. [480K x $6.50 = $3120K]
Product B: LongLife1.Requires new design resources.2.400,000 batteries ordered with 6,000 separate orders.3.4,000 custom designs prepared.
4.Each LongLiferequires 48minutes of machine
time for a total of 320,000 machine-hours.[320K x $6.50 = $2080K]
The ABC team determined that Baxter Battery will have these total activities for each activity cost pool . . .
10,000 customer orders,
4,000 design changes,
800,000 machine-hours,2,000 customers served.
Given data
Given data
Sheet1
| Cost | $ 3,170 | ||
| Life | 4 years | ||
| Salvage value | zero | ||
| Increase in annual cash inflows | 1,000 |
Sheet2
Sheet3
Cost $3,170
Life4 years
Salvage valuezero
Increase in annual cash inflows 1,000
Sheet1
| Cost and revenue information | |||||||
| Cost of special equipment | $ 160,000 | ||||||
| Working capital required | 100,000 | ||||||
| Relining equipment in 3 years | 30,000 | ||||||
| Salvage value of equipment in 5 years | 5,000 | ||||||
| Annual cash revenue and costs: | |||||||
| Sales revenue from parts | 803,300 | ||||||
| Cost of parts sold | 400,000 | ||||||
| Salaries, shipping, etc. | 270,000 |
&A
Page &P
Cost and revenue information
Cost of special equipment $160,000
Working capital required100,000
Relining equipment in 3 years30,000
Salvage value of equipment in 5 years5,000
Annual cash revenue and costs:
Sales revenue from parts803,300
Cost of parts sold400,000
Salaries, shipping, etc.270,000
Sheet1
| Cash flow information | |||||||
| Cost of computer equipment | $ 250,000 | ||||||
| Working capital required | 20,000 | ||||||
| Upgrading of equipment in 2 years | 90,000 | ||||||
| Salvage value of equipment in 4 years | 10,000 | ||||||
| Annual net cash inflow | 120,000 |
&A
Page &P
Cash flow information
Cost of computer equipment $ 250,000
Working capital required20,000
Upgrading of equipment in 2 years90,000
Salvage value of equipment in 4 years10,000
Annual net cash inflow120,000
Sheet1
| Install the New Washer | |||||||||
| Year | Cash Flows | 10% Factor | Present Value | ||||||
| Initial investment | Now | $ (300,000) | 1.000 | $ (300,000) | |||||
| Replace brushes | 6 | (50,000) | 0.564 | (28,200) | |||||
| Net annual cash inflows | 1-10 | 60,000 | 6.145 | 368,700 | |||||
| Salvage of old equipment | Now | 40,000 | 1.000 | 40,000 | |||||
| Salvage of new equipment | 10 | 7,000 | 0.386 | 2,702 | |||||
| Net present value | $ 83,202 |
&A
Page &P
Install the New Washer
Year
Cash
Flows
10%
Factor
Present
Value
Initial investmentNow(300,000)$ 1.000 (300,000)$
Replace brushes6 (50,000) 0.564 (28,200)
Net annual cash inflows1-1060,000 6.145 368,700
Salvage of old equipmentNow40,000 1.000 40,000
Salvage of new equipment10 7,000 0.386 2,702
Net present value83,202$
Sheet1
| Cost of equipment | $ 300,000 | ||
| Working capital needed | $ 75,000 | ||
| Estimated annual cash receipts from ore sales | $ 300,000 | ||
| Estimated annual cash expenses for mining ore | $ 170,000 | ||
| Cost of road repairs needed in 6 years | $ 40,000 | ||
| Salvage value of the equipment in 10 years | $ 100,000 | ||
| After-tax cost of capital | 12% | ||
| Tax rate | 30% |
Sheet2
Sheet3
Cost of equipment $ 300,000
Working capital needed $ 75,000
Estimated annual cash
receipts from ore sales
$ 300,000
Estimated annual cash
expenses for mining ore
$ 170,000
Cost of road repairs
needed in 6 years
$ 40,000
Salvage value of the
equipment in 10 years
$ 100,000
After-tax cost of capital
12%
Tax rate 30%
12345$1,000$0$2200$1800$1500
When the cash flows associated with an investment project change from year to year, the payback formula introduced earlier cannot be used.
Instead, the un-recovered investment must be
tracked year by year.
DeductMethod
TAX RATE
CONSIDERS
DEDUCTION OF
DEPRECIATION
EXPENSE
NOT COVERED
THIS CHAPTER
2xx0
Base
2xx52xx42xx12xx22xx3
Sheet1
| Contribution Margin | ||||
| Solution | ||||
| Contribution margin lost if digital watches are dropped | $ (300,000) | |||
| Less fixed costs that can be avoided | ||||
| Salary of the line manager | $ 90,000 | |||
| Advertising - direct | 100,000 | |||
| Rent - factory space | 70,000 | 260,000 | ||
| Net disadvantage | $ (40,000) | |||
| Less: fixed expenses | ||||
| General factory overhead | $ 60,000 | |||
| Salary of line manager | 90,000 | |||
| Depreciation of equipment | 50,000 | |||
| Advertising - direct | 100,000 | |||
| Rent - factory space | 70,000 | |||
| General admin. expenses | 30,000 | 400,000 | ||
| Net loss | $ (440,000) |
&A
Page &P
Contribution Margin
Solution
Contribution margin lost if digital
watches are dropped(300,000)$
Less fixed costs that can be avoided
Salary of the line manager90,000$
Advertising - direct100,000
Rent - factory space70,000 260,000
Net disadvantage
(40,000)$
Segment Income Statement
Digital Watches
Sales500,000$
Less: variable expenses
Variable manufacturing costs120,000$
Variable shipping costs5,000
Commissions75,000 200,000
Contribution margin300,000$
Less: fixed expenses
General factory overhead60,000$
Salary of line manager90,000
Depreciation of equipment50,000
Advertising - direct100,000
Rent - factory space70,000
General admin. expenses30,000 400,000
Net operating loss
(100,000)$
Sheet1
| Cash flow information | |||||||
| Cost of computer equipment | $ 250,000 | ||||||
| Working capital required | 20,000 | ||||||
| Upgrading of equipment in 2 years | 90,000 | ||||||
| Salvage value of equipment in 4 years | 10,000 | ||||||
| Annual net cash inflow | 120,000 |
&A
Page &P
Sheet1
| Install the New Washer | |||||||||
| Year | Cash Flows | 10% Factor | Present Value | ||||||
| Initial investment | Now | $ (300,000) | 1.000 | $ (300,000) | |||||
| Replace brushes | 6 | (50,000) | 0.564 | (28,200) | |||||
| Net annual cash inflows | 1-10 | 60,000 | 6.145 | 368,700 | |||||
| Salvage of old equipment | Now | 40,000 | 1.000 | 40,000 | |||||
| Salvage of new equipment | 10 | 7,000 | 0.386 | 2,702 | |||||
| Net present value | $ 83,202 |
&A
Page &P
Sheet1
| Cost and revenue information | |||||||
| Cost of special equipment | $ 160,000 | ||||||
| Working capital required | 100,000 | ||||||
| Relining equipment in 3 years | 30,000 | ||||||
| Salvage value of equipment in 5 years | 5,000 | ||||||
| Annual cash revenue and costs: | |||||||
| Sales revenue from parts | 750,000 | ||||||
| Cost of parts sold | 400,000 | ||||||
| Salaries, shipping, etc. | 270,000 |
&A
Page &P
Cost and revenue information
Cost of special equipment $160,000
Working capital required100,000
Relining equipment in 3 years30,000
Salvage value of equipment in 5 years5,000
Annual cash revenue and costs:
Sales revenue from parts750,000
Cost of parts sold400,000
Salaries, shipping, etc.270,000
Sheet1
| Year | ||||||
| Item | 2007 | 2006 | 2005 | 2004 | 2003 | |
| Sales | $ 400,000 | $ 355,000 | $ 320,000 | $ 290,000 | $ 275,000 | |
| Cost of goods sold | 285,000 | 250,000 | 225,000 | 198,000 | 190,000 | |
| Gross margin | 115,000 | 105,000 | 95,000 | 92,000 | 85,000 |
&A
Page &P
Year
Item20072006200520042003
Sales400,000$ 355,000$ 320,000$ 290,000$ 275,000$
Cost of goods sold285,000 250,000 225,000 198,000 190,000
Gross margin115,000 105,000 95,000 92,000 85,000
Sheet1
| Year | ||||||
| Item | 2007 | 2006 | 2005 | 2004 | 2003 | |
| Sales | 145% | 129% | 116% | 105% | 100% | |
| Cost of goods sold | 150% | 132% | 118% | 104% | 100% | |
| Gross margin | 135% | 124% | 112% | 108% | 100% |
&A
Page &P
Year
Item20072006200520042003
Sales145%129%116%105%100%
Cost of goods sold150%132%118%104%100%
Gross margin135%124%112%108%100%
Schedule
| NORTON CORPORATION | |||
| 2007 | |||
| Number of common shares outstanding | 17,000 | ||
| Beginning of year | 17,000 | ||
| End of year | 27,400 | ||
| Net income | $ 53,690 | $ 57,500 | |
| Stockholders' equity | |||
| Beginning of year | 180,000 | 216,000 | |
| End of year | 234,390 | 220,000 | |
| Dividends per share | 2 | 8 | |
| Dec. 31 market price per share | 20 | ||
| Interest expense | 7,300 | ||
| Total assets | |||
| Beginning of year | 300,000 | ||
| End of year | 346,390 |
&A
Page &P
NORTON CORPORATION
2007
Number of common shares
outstanding
Beginning of year17,000
End of year27,400
Net income53,690$
Stockholders' equity
Beginning of year180,000
End of year234,390
Dividends per share2
Dec. 31 market price per share20
Interest expense7,300
Total assets
Beginning of year300,000
End of year346,390
Investing
• It shows uses of cash to acquire non-current assets, such as capital
expenditures, investments and acquisitions
• proceeds from sale of those assets are a source of [increase to] cash
Cash Flow Statement
Never net [add together] sales of long term assets including PPE with purchases
Never net repayment of debt with acquiring new debt
Add depreciation expense and amortization expense [write-off of goodwill]
as a source of Operating CF
Deprecation expense = changes in depreciation + depreciation of
depreciable assets [usually PPE] sold
Exceptions:
Remove gain/loss on sale of fixed assets from the IS Net income by
adding a loss and subtracting a gain in the Operating section of CF statement
If you know the amount of a debt repaid and you know the BS change in debt
then the new debt acquired is the change in debt + debt repaid
BS change in Deferred tax assets & deferred tax liabilities are Operating not Financing
or Investing
Purchase of PPE = BS change [opposite sign] - cost of assets sold
Proceeds [price SOLD] from sale of Long term assets inclusion PPE resource [+] of
cash in Investing section of cash flow statement
Must do GL account analysis for
Other non-current assets & Other non-current liabilities [Long-term liab.]
to determine if change is due to Operating or Investing activities for assets
or due to Operating or Financing activities for liabilities
The sum of CF for Operating, Investing, & Financing activities will
equal the BS Cash Change
ClassCo sells machine AARP 657 for215,000$ sold for A/R
Realizes a gain on the IS of:42,000$
Cost basis446,000$
Accum. Depreciation [AD]273,000$
Book Value173,000$
Sell price - BV42,000$
Journal entry recorded
DRCR
Accum. Depreciation [AD]273,000$ AD goes to -0-
Cost basis446,000$ Cost goes to -0-
Accts. Receivable215,000$ record A/R for sale
Gain on the Sale42,000$
For Cash Flow:
Deduct gain from Operating(42,000)$
Record Sale in Investing215,000$
Add Cost of asset sold for
Investing
(446,000)$
=∆ BS change - amt of cost sold
for Purchase of Fixed
assets/PPE
Add AD sold to ∆ AD on BS
for Deprec. Exp.
273,000$
=
∆
AD from BS + AD sold for
Deprec. Expense
Sum 0.00
Free Cash Flow=
Net Cash Provided by
Operating Activities
-
Capital
Expenditures
[often only
sustaining
considered]
-
Dividends
Free Cash Flow=
Net Cash Provided by
Operating Activities
-
Capital
Expenditures
-
Dividends
93$ =259$ -138$ -28$
Sheet1
| Free Cash Flow | = | Net Cash Provided by Operating Activities | - | Capital Expenditures | - | Dividends | |||
| $ 93 | = | $ 259 | - | $ 138 | - | $ 28 |
