We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

See Pricing

What's Your Topic?

Hire a Professional Writer Now

The input space is limited by 250 symbols

What's Your Deadline?

Choose 3 Hours or More.
Back
2/4 steps

How Many Pages?

Back
3/4 steps

Sign Up and See Pricing

"You must agree to out terms of services and privacy policy"
Back
Get Offer

Danshui Plant No. 2

Hire a Professional Writer Now

The input space is limited by 250 symbols

Deadline:2 days left
"You must agree to out terms of services and privacy policy"
Write my paper

Questions:
Danshui Plant No. 2
1. Using budget data, how many Apple iPhone 4’s would have to have been completed for Danshui Plant No. 2 to break even?

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.

Don't use plagiarized sources. Get Your Custom Essay on
Danshui Plant No. 2
Just from $13,9/Page
Get custom paper

3. Prepare a flexible budget for 180,000 iPhone 4’s and calculate flexible budget variances using actual costs for August.

4. Estimate material price and usage for flash memories, labor rate and usage (efficiency) variances, and the overhead spending variance for August.

5. What are some strategies or decisions that Wentao Chen should consider in trying to solve the problems with the 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?

Answer
1.
Variable Costs: 187.89+13.11+1.06 = $202.06 per unit
Fixed Costs: $729,000 per month
Revenue: 41,240/200 = $206.2 per unit
Contribution Margin = 206.2-202.06 = $4.14 per unit
Break-even = 729,000/4.14 = 176,086.96 units
Answer: 176,087 iPhones
2.
Total Expected Cost per unit: 41,140,000/200,000 = $205.7 per unit Actual Cost Per Unit: 38,148,000/180,000 = $211.93 per unit
3.
Flexible Budget Actual Variance
Number of Units 180,000 180,000 –
*Values in Thousands of Dollars($)
Revenue 37,116 37,476 360 F
Variable Costs:
Materials
Flash memory 4,860 5,249 389 U
Application Process 1,935 1,935 –
Chips – phone 2,529 2,529 –
Gyroscope 468 468 –
8 Other chips 12,771 12,643 128 F
22,563 22,824 261 U
Variable supplies and tools 11,257.20 11,305 47.80 U
Assembly and packing 2,359.80 3,092 732.20 U
Shipping 190.80 191 0.20 U
Total variable costs 36,370.80 37,412 1041.20 U
Fixed Costs:
Factory rent 400 400 –
Machine depreciation 150 150 –
Utility fee and taxes 52 52 –
Supervision 127 134 7
Total Fixed Costs 729 736 7
Total costs 37,099.80 38,148 1048.20 U
Net Income $16.20 $(672) $ 688.20 U
4.
Price Variance Usage Variance Total Variance
Samsung Flash Memory =│$29.16 – $27.00│x180,000
=$2.16 x 180,000
=$388,800 UN =│180,000 – 200,000│x$27
=20,000 x $27
= $540,000 F
$151,200
Favorable
Labor =│$13.11 – 17.18│x180,000
=$4.07 x 180,000
=$732,600 UN =│180,000 – 200,000│x$13.11
=20,000 x $13.11
= $262,200 F
$470,000
Unfavorable
Fixed Manufacturing Overhead Spending Variance =│$736,000 – $729,000│ = $7,000 Unfavorable
$7,000
Unfavorable
5.
It appears as though Wentao Chen is in a predicament concerning his plant’s profitability and production. Although his plant is struggling with their bottom line and production, there are many factors which he cannot control; the issues that Wentao should focus on are his total production which is inherently based on his labor problems. As mentioned in the case, the factory is having a major problem with finding enough labor to match their production. This should be the top priority of the firm. A solution to this problem would be to increase the labor rates enough to meet the demand of workers in the area. Although the firm raised their labor by about 30%, this was obviously not enough to meet the demand. If the firm is able to raise their labor rates to the point where they can hire enough employees to meet production, it should significantly decrease their loss. While some analysts might be enticed to inquire about fixed manufacturing costs and other variable costs, we simply cannot speculate that these costs can be altered in any way.

Cite this Danshui Plant No. 2

Danshui Plant No. 2. (2016, May 29). Retrieved from https://graduateway.com/danshui-plant-no-2/

Show less
  • Use multiple resourses when assembling your essay
  • Get help form professional writers when not sure you can do it yourself
  • Use Plagiarism Checker to double check your essay
  • Do not copy and paste free to download essays
Get plagiarism free essay

Search for essay samples now

Haven't found the Essay You Want?

Get my paper now

For Only $13.90/page