Case #3 - Danshui Plant #2 Do not simply copy my check figures, make sure your work shows how they are actually calculated (if calculations are necessary)! 1) Using the budget data, how many Apple iPhone 4's would have to have been completed for Danshui Plant No.2 to break even? Budget Actual Budgeted Sales $41,240 Budgeted Sales Units 200 Budgeted Selling Price $206.20 Contribution Income Statement (Unit Cost) 200 180 Budget Actual Unit Selling Price $206.20 Unit Variable Costs: Materials $187.89 Labor $13.11 Shipping $1.06 Total Unit Variable Cost $202.06 Unit Contribution Margin $4.14 Total Fixed Costs $729.00 Unit Fixed Cost $3.65 Unit Gross Margin $0.49 Breakeven Units 176,087 2) Using budget data, what was the total expected cost per Unit if all manufacturing and shipping overhead (both variable and fixed) were allocated to planned production? What was the actual cost per unit of production and shipping? (See above calculations.) Budget Actual Unit Variable Cost $202.06 Unit Fixed Cost $3.65 Cost per Unit $205.71
3) Prepare a flexible budget for 180,000 iPhone 4's and calculate flexible budget variances using actual costs for August. Units 200 180 180 Budget Budget per Unit Flexible Budget Actual Variance F/U Revenue (transfer from Shenzhen) Variable costs: Materials Flash memory Application process Chips-phone Gyroscope 8 other chips Subtotal Variable supplies and toos Labor Assembly and Packing Shipping Total Variable Costs Contribution Margin Fixed Costs: Factory rent Machine depreciation Utility fee and taxes Supervision Total fixed costs Total Costs Net Income
4) Estimate material price and usage for flash memories, labor rate and usage (efficiency) variances, and the overhead spending variances for August. (Assume a standard labor rate of $.92 / Tell students) Flash memory: Standard Actual Price $29 Labor per Unit Standard Price $27 Labor per hour Actual Quantity 181,000 Hours per Unit Standard Quantity 180,000 Production Standard Hours Labor Variances Actual Rate Standard Rate $0.92 Actual Labor $ Actual Hours 0 Actual Rate Standard Hours 0 Actual Hours Flash Memory Variance: Purchase Price Variance: AQ (AP - SP) Usage Variance: SP(AQ - SQ) Total Variance Labor Variance: Purchase Price Variance: AH (AR - SR) Usage Variance: SR(AH - SH) Total Variance Overhead Spending
5) What are some strategies or decisions that Wentao Chen should consider in trying to solve the problems with Apple iPhone 4 contract in the next nine months? How would these change the costs and profitability of Danshui Plant No. 2 and the iPhone 4 contract?
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