Title: Danshui Plant No. 2 ------------------------------------------------- Authors: William Bruns, Julie H. Hertenstein, Kelvin Liu 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
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Apple Corporation released iPhone 4 on June 24, 2010 and sold more than 1.7 million units 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.
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INTRODUCTION AND MAIN ISSUES Danshui was a contract manufacturer that assembled electronic products for companies wishing to save labour costs by locating in southern China. Because of high demand for iPhone 4, Apple had contracted with Danshui to assemble iPhone in Plant No. 2. The contract need Danshui to assemble 2.4 million iPhone in the period between June 1, 2010 and May 31, 2011. Wentao Chen, manager of Danshui Plant No. 2 was worried because in the third month of
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Solution to Danshui Case 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 /
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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
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Managerial Accounting Case #3 (Danshui Plant No. 2) – Instructions I would like to see all of your calculations as a part of your write-up (except for Question 3). For Q3, please attach any relevant tables as an appendix. Question 1: You’ll use the data provided in the first column of Exhibit 3 to calculate the break-even point (see chapter 3 lecture notes for details). Question 2: You’ll just compute the expected and actual total cost per unit. Question 3: Prepare a table with four columns:
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Overview: Apple Corporation released iPhone 4 on June 24, 2010 and sold more than 1.7 million units 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
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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
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4 Estimate material price and usage for flash memories, labor rate and usage (efficincy) variances, and the overhead spending variante for August’. Het bedrijf heeft $2 per eenheid flash memory te veel betaald, in totaal heeft het een verlies van -$362.000 geleden. Omdat de verkoopprijs ook met $2 is gestegen kunnen we concluderen dat het bedrijf de stijging op de verkoopprijs heeft laten belasten. De reden voor de prijsstijging kan zijn de afdeling inkoop niet de juiste leverancier kiest om
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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
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