Response to the following problem:
Manufacturing companies must decide whether to operate their own manufacturing facilities or instead outsource the manufacturing function to a third-party (outside) company. This decision impacts both company managers and also financial statement items. Access the annual report or 10-K for both Research In Motion (RIM) and Apple. The RIM report is for the year ended February 27, 2010 and the Apple report is for the year ended September 26, 2009.
Required:
1. Determine whether RIM operates its own manufacturing facilities or outsources the manufacturing function.
2. Determine whether Apple operates its own manufacturing facilities or outsources the manufacturing function.
3. For both companies, determine the amounts they report for (a) raw materials inventory, (b) work-inprocess inventory, and (c) finished goods inventory. Explain how the decision on outsourcing (or not) of manufacturing operations is related to the components of inventory.