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Question

Danshui Plant No. 2

Assignment Questions:

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 (using 200,000 units) production? What was the actual (using 180,000 units) 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.      For the month of August, calculate the following variances (assume the standard labor rate is $0.92 per hour):

a.      material price variance for flash memories

b.      material usage variance for flash memories

c.      labor rate variance

d.      labor usage (efficiency) variance

e.      overhead spending variance

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? Approach this from both Danshui's and Apple's point of view.

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