using budget data how many apple iphone 4 s would have to have been completed 239121

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? 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?

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9-913-525 SEPTEMBER 28, 2012 WILLIAM BRUNS JULIE H. HERTENSTEIN KELVIN LIU Danshui Plant No. 2 In August 2010, Wentao Chen, manager of Danshui Plant No. 2 in southern China, was anxious. The plant was in the third month of a 12-month contract to assemble the Apple iPhone 4. The contract called for Danshui to assemble 2.4 million iPhones in the period between June 1, 2010, and May 31, 2011, but now in the third month of the contract, production was only 180,000 units per month. Chen called Jianye Ma, the plant controller, to request a summary of monthly operations for August as soon after the end of the month as possible. Danshui was a contract manufacturer that assembled electronic products for companies wishing to save labor costs by locating in southern China where semiskilled labor was available for less than one dollar an hour. Manufacturers like Danshui assembled parts in large plants using assembly line techniques according to specifications of the international companies that contracted with them for assembly and final testing. The largest contract manufacturer in China was Foxconn, a division of the Hon Hai Group of Taiwan, with more than 800,000 workers in China alone and contracts to supply Apple, Dell, and Hewlett Packard among others. In expectation of high demand for the iPhone 4, Apple had contracted with Danshui to assemble iPhones in Plant No. 2, which had been assembling computer hard drives on a contract that was fulfilled at the end of May 2010. Although the assembly of hard drives was different than assembly of iPhones, Danshui was confident that its workers would adapt to the new assembly tasks and that it could hire and train the additional workers as needed. Chen’s job was to get Plant No. 2 up to speed to fulfill the Apple contract and earn a profit for Danshui’s parent company, located in Hong Kong, China. Danshui Plant No. 2 was a profit center that was credited for each iPhone produced and shipped, and…


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