Introduction Danshui Plant No.2 is a contract manufacturer locating in southern China and was assembles electronic products for companies wishing to save labor costs and they are using semiskilled labor for less than 1 dollar an hour. In August 2010, Danshui Plant No.2 in southern China has a 1 year contract in the period between 1 June 2010 and 31 May 2011 with Apple incorporation to assemble the Apple iPhone 4. Based on the contract, Danshui need to assemble 2.4 million iPhones within 1 year.
INTRODUCTION DANSHUI Plant No.2 is located in southern China was a contract manufacturer that assembled electronic products for companies wishing to save labor costs. DANSHUI was getting a one-year contract with apple Inc. to assemble 2.4 million iPhones. It was very anxious when in the first three months of the contract, the plant is unable to be assembled as many as the expected and its operating at a loss. The plant has had difficulty hiring enough workers despite raising wages to 35%. In
the Danshui Plant No. 2 to assemble the new iPhones. Danshui Plant No.2, a contract manufacturer in southern China that assembles electronic products for companies wishing to save on labor costs, received a one-year contract starting on June 1, 2010 with the Apple Corporation to assemble 2.4 million iPhone 4s. In the first three months of the contract it became obvious that the plant was unable to assemble the expected 200,000 iPhones per month and was operating at a loss. Although the plant is
ACCOUNTING FOR BUSINESS DECISION MAKING (MBSA 1413) DANSHUI CASE STUDY PREPARED FOR DR. SULAIMAN ARIS PREPARED BY MUHAMMAD ASHRAF BIN LISMAN (MBS141031) KHAIRUL IKHSAN BIN SELAMAT (MR 121159) ROHESWARAN GANEASON (MR 131107) 9TH MAY 2015 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? Variable Costs = Material Cost + Labor Cost + Shipping Cost = 187.89+13.11+1.06 = 202.06 / Unit Fixed
from reading the Danshui Plant No.2 case, we can see that there is no enough information to evaluate the performance of the pant for the first three contracts to assembly Apple iPhone 4. Analysis of the issue To get a clear picture a flexible budget was prepared for the month end of August 2010. (Shown in the table below) From the flexible that is prepared it can seen the performance of Danshui Plant NO.2 is not good enough as what it suppose to be. The budget show that Danshui has unfavorable
Question for 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? 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. Using budget data, what was the total expected cost per unit
Danshui Plant No.2 Case Study Yuli Tang Rui Zhang Due Date: April 9, 2013 1. As we can see from the Exhibit 1, 176,087 Apple iPhone 4’s would have to have been completed for Danshui Plant No.2 to break even. 2. The total expected cost per unit was $205.7 per unit and the actual cost per unit was $211.93 per unit. See Exhibit 2. 3 & 4. The data is showing in the Exhibit 3 & 4. 5. From the data of question 3, the variance of revenue is favorable because Apple increased price of