danshui plant no.2

Topics: Variable cost, Costs, Fixed cost Pages: 7 (1241 words) Published: October 10, 2013

MAIN ISSUE
A part 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 variance in the assembly the flash memory part, variable tools and supplies, assembly and packing, shipping nad the last one on the supervision. As for the flash memory it has been stated that Samsung had raised the price by $2.00 which had been cover by the Apple as their neutralized the profit which supposedly to give a favorable variance. But for the budget it can seen that the flash memory is showing an unfavorable variance. This is due to lack of skills during the installation the labour which had lead wastage as they need to replace the damage flash memory with the new one. The replacement of the flash memory due wastage had increased the cost that is expected which had lead to unfavorable variance. Variable supplies and tools show an unfavorable variance has it has connection with installation of parts in the iPhone 4 especially on the flash memory installation part. .so when the labour done a wastage or reckless job during the installation of flash memory or any parts of iPhone 4, it will cause the labour to use a new tools and supplies. This is the main reason why variables supplies and tools had an unfavorable variance. The amount of unfavorable variance in the assembly and packing is vey significant. This is because installations of the I Phone 4 involve to many steps (140) and 325 labors within 5 days. This will a higher chances of error to occurred as the installation parts in the iPhone 4 is handle by the different individual who has different skill and type of working style. This will indirectly cause lot wastage in term of cost and time due careless and lack of skill of the labour. The main root why shipping department has an unfavorable variance is due to lack of manpower. When there is lack of manpower with the expertise or skill that is needed, the departure and the arrival Apple iPhone 4 will be delay and according to schedule that has been planned. Therefore, there will an increment in the cost shipping which will lead to unfavorable variance. The last unfavorable variance is on the supervision. Due to changing from assembly of computer parts to the iPhone 4 parts, the supervisor have take some time to learn before they could guide the labour under the supervision. Not only that, the burden in the supervisor work aslo had increased has the assembly of the iPhone parts involve to many steps and individual. Thus, the company need increase the salary of supervisor which had because the amount of the supervision increased. But the increasement is not that significant compare increasement increase in the material parts.

DANSHUI PLANT NO.2

FLEXIBLE BUDGET FOR THE MONTH END OF AUGUST 2010

 
Budgeted($'0000)
Actual ($000)
variance
 
180000unit
180000unit
 
Revenue (41240000/200000) * 180 000
37116
37476
360 F
Variable cost:
 
 
 
Material:
 
 
 
Flash memory (180k*27)
4860
5249
(389 )U
Application Process(180k*10.75)
1935
1935
-
Chips -phone(180k*14.05)
2529
2529
-
Gyroscope(180k*2.60)
468
468
-
8 Other Chips (180k* 70.95)
12771
12643
128 F
Variable Supplies & Tools(180k*62.54)
11257.2
11305
(47.8 )U
Total Material Cost
33820.2
34129
(308.8) U

 
 
 
Labour:
 
 
 
Assembly & Packing ( 180k*13.11)
2359.8
3092
(732.2) U
Shipping (180k *1.06)
190.8
191
(0.2) U
Total Variable Cost
36370.8
37412
(1041.2) U...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about Danshui Plant No.2
  • Essay about Danshui Plant 2 Answer
  • Danshui Plant No. 2 Case Analysis Research Paper
  • DANSHUI PLANT NO 2 Essay
  • danshui plant no.2 Essay
  • Case Questions Danshui Plant Research Paper
  • Danshui plant no2 Essay
  • Danshui Plant Essay

Become a StudyMode Member

Sign Up - It's Free