• Apple is planning to introduce a new wearable device with the following costs and revenue projections:
  • Development Costs: $1 billion
  • Production Costs per Unit: $200
  • Selling Price per Unit: $400
  • Estimated Annual Sales: 10 million units
  • Marketing Expenses: $500 million annually

• Requirements:
  1. Calculate the total annual revenue and production cost for the new device.
  2. Prepare an income statement for the first year of sales.
  3. Analyze the contribution margin ratio for the new wearable device.
  4. Discuss the strategic importance of the new device in Apple’s product portfolio.
  5. Evaluate the potential risks and competition in the wearable technology market.