Materials Create the Product, Overhead Costs, and Labor

Financial and Managerial Accounting
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May 31, 2021
Financial and Managerial Accounting
Understanding the relationship between a product and the costs associated with it is essential for any manager. It allows him to have a better insight into the costs directly and indirectly related to it and the methods that can be used to reduce them. Accordingly, this article would focus on a smartphone for a product. Smartphones are one of the most widely used and consumed products these days, and such a trend is more likely to continue in the coming decades, if not centuries. Notably, the subsequent sections of this article would try to determine some of the materials used to create the product, overhead costs, and labor. Finally, a section on how to reduce such methods would also be provided.
Costs for Creation
Some of the most common materials that are used to create a smartphone are; (1) copper, (2) aluminum, (3) silver, and (4) gold. These minerals are essential for creating a smartphone’s components, particularly those related to its circuitry. For example, in one article written by Goldman (2011), the estimated costs of these minerals per smartphone created are $1.82 gold (0.0034 grams), 12 cents of copper (16 grams), 2 cents of platinum (0.00034 grams), and 36 cents of silver (0.35 grams). As of 2021, these numbers have increased due to smartphones’ greater demand and functionality, increasing production costs, and the price per unit sold.
In line with this, one way to reduce the price for these smartphone components is to establish partnerships with both governmental and non-profit organizations to increase electronic recycling efforts. As of 2019, reports show that the world has discarded about 53.6 million tons of “e-waste,” including phones, DVD players, and small gadgets CITATION Ear21 \l 1033 (Earth911.com, 2021). Although recycling plants could usually sort out and find these materia...