...Danshui Plant No.2 1. Variable Costs = Material Cost + Labor Cost + Shipping Cost = 187.89+13.11+1.06 = 202.06 / Unit Fixed Costs = 729,000 / Month Price = 41,240,000 / 200,000 = 206.2 Contribution Margin = 206.2-202.6 = 4.14 / Unit When it comes to the break even, Contribution margin * Unit(BE) = Fixed Costs. Unit(BE) = 729,000 / 4.14 = 176,086.96， So the break even for Danshui is 176,087. 2. Based on the data in Exhibit 3, Total expected cost / Unit = 41,140,000 / 200,000 = $205.7 / Unit Actual cost / Unit = 38,148,000/180,000 = $211.93 / Unit 3. Flexible Budget | Budget(180,000) | Actual(180,000) | Variance | 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 | Variable supplies and tools | 11,257.2 | 11,305 | 47.8 U | Subtotal | 33,820,2 | 34,124 | 303.8 U | Labor | | | | Assembly and packaging | 2,359.8 | 3,092 | 732.2 U | Shipping | 190.8 | 191 | 0.2 U | Total variable costs | 36,730.8 | 37,412 | 1041.2 U | Fixed costs: | | | | Factory rent | 400 | 400 | | Machine depreciation | 150 | 150 | | Utility fee and taxes | 52 | 52 | | Supervision | 127 | 134 | 7 U | Total fixed costs | 729 | 736 | 7 U | Total costs | 37,099.8 | 38,148 | 1,048.2 U | Net income...
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...1. Danshui Plant No 2 Case Study Free Essays 1 - 30 www.papercamp.com/group/danshui-plant-no-2-case-study/page-0 Search Results for 'danshui plant no 2 case study'. Displaying 1 - 30 of 1,500. Case Studies Of Corporate Firms. : distribution of wafer production lines, 1995 ... 2. Danshui Plant No. 2 Case Study features.rr.com/article/080P6pegST5Zp?q=iPhone 1) Using budget data, 176087 iPhone 4's must be completed on a monthly basis in order for Danshui Plant No. 2 to break even. The first step is to calculate the ... 3. Danshui Plant No. 2 - Harvard Business Review hbr.org/product/danshui-plant-no-2/an/913525-PDF-ENG Sep 28, 2012 – Danshui Plant No. 2 in southern China has a one-year contract with Apple Inc. to assemble 2.4 mil... 4. [PDF] Danshui Plant No. 2 - Cool Tutoring www.cooltutoring.com/uploads/1/1/9/0/.../913525-pdf-eng_copy.pdf File Format: PDF/Adobe Acrobat - Quick View Aug 3, 2010 – 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 ... 5. Danshui Plant No. 2 - Case - Harvard Business School www.hbs.edu/faculty/Pages/item.aspx?num=43379 Danshui Plant No. 2 in southern China has a one-year contract with Apple Inc. to assemble 2.4 million iPhones. In the first three months of the contract, the plant ... 6. Danshui Plant No. 2 - Sport Balla www.sportballa.com/2013/03/plant-2-danshui-no - United States Danshui Plant No. 2. Source: Term Paper Warehouse , Mar 31 2013,...
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...Introduction Danshui was a contract manufacturer that assembled electronic products located in Southern China. Danshui has a contract to assemble 2.4 million iPhones within the period from 1st June 2010 to 31st May 2011 and their current production is only 180,000 units per month compared to planned production is 200,000 units. Danshui is using semiskilled labor for less than 1 dollar an hour and assembly line technique. Due to high demand of IPhone 4, Apple had contracted with Danshui to assemble iphones in Plant No. 2. A budget had been prepared soon after iPhone contract was signed. Therefore, Danshui plant manager, Wentao Chen was responsible to control all costs including materials, labor, overhead and shipping. IPhone 4 contained more than 100 components including flash memories, application processor, chip for phone calls, gyroscope and etc. Therefore, each worker will need to focus more than one task in a short period of time due to its assembly line toward completion. The assembly process entirely based on handwork by workers, where there are 140 steps in assembly process to be done by 325 individuals during 5 working days. The August Report had shown a loss of $672,000 although budget is $100,000, this is due to unable to produce 200,000 iPhone 4 units on demand. The major obstacle is not hiring enough qualified labor although wages was raised by 30% since July. Besides, flash memory installation also causing a trouble where they can be damaged by heat if not...
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...DANSHUI PLANT NO. 2 CONTENTS | PAGE | 1.0 Introduction | | 2.0 Main issue | | 3.0 Problem statement | | 4.0 Data Analysis 4.1 Breakeven analysis 4.2 Total cost variance analysis 4.3 Flexible budget performance analysis 4.4 Variance analysis | | 5.0 Strategies, interpretations, recommendations and justifications | | 6.0 Conclusion | | 7.0 References | | 1.0 INTRODUCTION Danshui Plant No. 2 in southern China has a one-year contract with Apple Inc. to assemble 2.4 million iPhones. In the first three months of the contract, the plant is unable to assemble as many phones as expected and is operating at a loss. The plant manager must analyze the budget and prepare a summary of monthly operations to help identify the source of performance problems. The plant has had difficulty hiring enough workers despite raising wages over 30%. In addition, the assembly process for an iPhone is complicated, with 140 steps involving over 100 components. The plant manager considers whether a flexible budget would be more useful for uncovering problems than the static budget currently being used. Wentao Chen, manager of Danshui was anxious upon reviewing the monthly operation’s performance for August as in the third month of the contract, production was only about 180,000 units. Meanwhile, Jianye Ma, the plant controller requested a summary of monthly operations for August as soon after the end of the month as possible. 2.0 MAIN ISSUE Danshui Plant manager Wentao...
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...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. However, Wentao Chen, manager of Danshui Plant No.2 was anxious about the plant is not able to assemble 2.4 million as their expected and is operating at a loss when the third month of the contract. Their current production was only 180,000 units per months compared to their planned monthly budget is 200,000 units. Therefore, manager was called the plant controller to analyze the budget and request a summary of monthly operations for August as soon after the end of the month as possible in order to identify the source of performance problem. Problem statement In the contract between Apple and Danshui Plant No.2, Danshui need to assemble 2.4 million iPhone within 1 year. This means that Danshui need to produce 200,000 units iPhone 4 per month but now in the third month of the contract they only produce 180,000 per month. Therefore, there are unable to assemble the iPhone 4 within 1 year this may because of they are lack of qualified labor. Danshui Plant No.2 are employs those semiskilled...
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...in the first three days. To prepare for the launch of the new product, Apple contracted with 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 known for hiring semi-skilled workers, the new iPhone contract required a complex assembly process entirely based on handwork by 325 workers, with 140 steps involving 100 components during 5 days. To anticipate the need for qualified workers, Danshui had raised their factory wages by almost 30%. But even with the wage increase, Danshui was not able to hire enough qualified workers to assemble the complex new product. Another issue was that, based on original modeling, Danshui was actually operating at a loss and was unable to fill the expected 200,000 per month iPhone quota in the first three months. To begin analyzing the root causes for the shortfall, the controller had considered preparing a “flexible budget” to provide a more realistic comparison of the performance to the budget. If the plant does not analyze the root causes of the problems and find the alternatives ways, it will not be able...
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...Danshui Plant No.2 The following case focuses on Danshui, a contract manufacturer that assembled electronic products. Danshui is currently in the third of a 12 months’ contract to assemble 2.4 million units of Apple’s iPhone 4. Monthly production target for Danshui is 200,000 units but three months’ study reflects that Danshui may not meet this target in 12 months and would also overrun the cost barrier thus landing in an unprofitable situation. Plant controller, Jianye Ma presented her analysis for August production to the plant manager, Wentao Chen. According to this report, the main difficult the plant is facing is being able to hire enough people to get the production to the 200000 units per month budgeted, despite having increased wages by a 30%. Questions 1. A. Total expected Cost – 41,140,000$ for 200,000 units ------------------------------------------------- Cost per unit – 205.70$ B. Actual Cost – 3,8148,000$ for 180,000 units ------------------------------------------------- Cost per unit – 211.91$ 2. The flexible budget variances can be seen in Appendix1. According to the results, there is an overall unfavourable variance of 1048.2$. this means, that even if production has been 180,000 instead of 200,000, there is still a variance NOT EXPLAINED by the reduction in volume. The colours in appendix one represent whether the impact of the variance is positive (green) or negative (red). It can be seen, that assembly and packaging represents the highest...
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