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Prepare a flexible budget for 180,000 iPhone 4s, and calculate flexible budget variances using actual costs for August. For the month of August, calculate the

Prepare a flexible budget for 180,000 iPhone 4s, and calculate flexible budget variances using actual costs for August.

For the month of August, calculate the following variances (assuming the standard labor rate is $0.92 per hour):

  1. Material price variance for flash memories
  2. Material usage variance for flash memories
  3. Labor rate variance
  4. Labor usage (efficiency) variance
  5. Overhead spending variance

What are some strategies or decisions that Wentao Chen should consider when trying to solve the problems with the Apple iPhone 4 contract in the next 9 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.

Bill of materials (per unit)
Purchased chips:
Flash memory (Samsung)$     27.00
Application processor (Samsung)         10.75
Chip for phone calls (Infinion)         14.05
Gyroscope (STMicoelectronics)            2.60
8 other purchased chips         70.95
$  125.35
Variable supplies and tools         62.54
$  187.89
Labor:
Assembly and packaging (per unit)$     13.11
Shipping (per unit)$        1.06
Total Standard Cost per Unit

$  202.06

Factory rent$         400,000
Machine depreciation             150,000
Utility fee and local taxes                52,000
Supervision             127,000
Monthly fixed costs$         729,000
Total revenueTotal unitsRevenue per unit
Revenue per unit$41,240,000          200,000$            206.20
Standard cost per unit                202.06
Contribution margin per unit$                  4.14
Break-even in units             176,087
Calculation of standard labor hours per unit:
Standard cost of labor per unit$               13.11
Cost of direct labor per hour                      0.92
Direct labor hours per unit                   14.25DLH per unit

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