Let's think about the risk Tim Cook faces on behalf of Apple whether Apple should again go after the automobile market. This is a "bet the company" decision. How can he mitigate the financial risk surrounding such a large decision. He could avoid the risk around this decision by going after a market where they can incrementally bring their expertise to bear over time. He could transfer some of the risk by entering into a joint venture with other firms who are working on electric vehicles and batteries. He could assume all of it by moving full speed ahead all alone. He could reduce it by focusing on areas of the car market which they excel at. He could hedge his risk by creating markets for products which could be used in many other companies. Can you identify risks at your company and ways you might mitigate them if you were the CEO?

TUTORIAL QUESTIONS Year 1. What are the three components of the manufacturing account? 2. Explain the rationale behind the accounting for manufacturing profit 3. In the accounting for unrealized profits, how are the realization concept and the cost concept applied Use this tabular schedule as a guide for questions 4 & 5 Value of the Finished Goods Factory Mark up % Cost of the Finished Goods Unrealized Profit for the year 15% 1 2 10% 3 20% 4 20% ry or .C Change in the Provision for 4. The Shane Warne is a manufacturer of cricket balls. These are transferred from the manufacturing to the trading department at a factory mark up of 20%. The closing stock for the first four years were $18,000; $12,000; $19,200; and $16,800. Unrealized Profit a. Calculate the unrealized profits for each year b. State the accounting entry for the change in provision for unrealized profits for each year c. Explain how the provision for unrealized profit is treated in the balance sheet at the end of each year 23,000 19,800 28,800 30,000 5. Fruta is a manufacturer of natural fruit juices. The finished goods are transferred to the trading department at a mark up rate to be determined from year to year. Data for the first four years were as follows: YR MARK UP RATE STOCK OF FINISHED GOODS 6. The P follow a. Calculate the unrealized profits for each year b. State the accounting entry for the change in provision for unrealized profits for each year