60.1K

Verified Solution

Link Copied!

• Estimate the product costs is for Fitbit.In 2018, we focused on providing more choice and accessibility to consumers in wearables to drive acquisition of users. We introduced Fitbit Versa, our first mass appeal smartwatch in the second quarter, resulting in increased smartwatch revenue over the course of 2018. Smartwatch revenue increased to 44% of revenue in 2018, from 8% in 2017. We also launched Fitbit Charge 3, which innovates on our Charge family of trackers, and which has sold more than 38 million devices. It gives people health and fitness features in a slim, premium tracker design, with smart functionality, and long battery life at an affordable price. The introduction of Fitbit Ace, a tracker designed for kids ages 8 and up and Fitbit family accounts, also expanded our addressable market.

FITBIT Financial statement	2018	2017
(in thousands, except per share data)
Consolidated Statements of Operations Data :
Revenue	$ 1,511,983.00	$ 1,615,519
Cost of revenue (2)	$ 908,404.00	$ 924,618
Gross profit	$ 603,579.00	$ 690,901
Operating expenses:
Research and development (2)	$ 3,332,169.00	$ 343,012
Sales and marketing (2)	$ 344,091.00	$ 415,042
General and administrative (2)	$ 116,627.00	$ 133,934
Change in contingent consideration
Total operating expenses	$ 792,887.00	$ 891,988
Operating income (loss)	$ 189,308.00	$ (201,087)
Interest income (expense), net	$ 7,808.00	$ 3,647
Other income (expense), net	$ (2,642.00)	$ 2,796
Income (loss) before income taxes	$ (184,142.00)	$ (194,644)
Income tax expense (benefit) (3)	$ 1,687.00	$ 82,548
Net income (loss)	$ (185,829.00)	$ (277,192)
Net income (loss) per share attributable to common stockholders (4) :
Basic	$ (0.76)	$ (1.19)
Diluted	$ (0.76)	$ (1.19)
Other Data :
Devices sold (5)	$ 13,939.00	$ 15,343
Active users (6)	$ 27,627.00	$ 25,367
Adjusted EBITDA (7)	$ (31,361.00)	$ (52,158)
Free cash flow (8)	60,327	-24,919

• Do the costs described include direct materials, direct labor, and manufacturing overhead?
• Are any product costs missing from these analyses?
• Discuss how you would try to determine direct materials, direct labor, overhead costs.
• Are there other costs that are not considered?
• Which product costing method do you think is appropriate for the product you chose and why?
• Are you outraged by the product mark-up?

Answer & Explanation Solved by verified expert

See Answer