Replies to post #126818 on Intel Corp (INTC)

[wbmw]

R&D is not. The cost of the Fab and equipment are.
>> I don't think so. gross margin includes cost of materials and labor.

You're both right. Much of the capital put into building the fab and purchasing the equipment is converted into depreciation, and applied to the cost of the wafers. The wafer costs are considered variable costs, and actually change depending on the loading of the fab. Gross margins are based on revenues minus variable costs, and that's why fab utilization affects GM's.

[herb will]

The question was whether Intel gross margins reflected fab and equipment cost.

"Examples of manufacturing overhead include the depreciation or the rent on the factory building, depreciation on the factory equipment,"

http://www.accountingcoach.com/blog/what-is-manufacturing-overhead-and-what-is-included

Well if you are selling beer that you brewed in a room in you house it would subject to income taxes. You might think about allocating a portion of the cost of the house to the room and taking depreciation charges to offset your profits.
http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Home-Office-Deduction