1) Using budget data, 176,087 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 contribution margin which is equal to the budgeted revenue, $41,240,000, minus the variable costs, $40,412,000, which gives us a contribution margin of $828,000. If we divide this number by the number of units, 200,000, we find the contribution margin per unit to be $4. 14. Now, all we need are the fixed costs, which are budgeted as $729,000 per month.
Plugging these values into the break-even point formula we find BEP=729,000/4. 14=176,087 units. ) Using budget data, the total expected cost per unit is $205. 70 and the actual cost per unit is $211.
94. Since manufacturing and shipping are both taken into account we need to focus on both variable and fixed costs. To find the total expected cost per unit we must add the budgeted variable costs, $40,411,000, and add them to the budgeted fixed costs, $729,000, and divide the sum of these numbers by 200,000 units. This gives the result of $205. 70 expected cost per unit. To find the actual cost per unit the process is the same except we use the data from the actual column in exhibit three.
So we have the variable costs at $37,412,000, add the fixed costs of $736,000 to this number, then divide by the number of units, 180,000, and we find the actual total cost per unit to be $211. 94. 3) In order to prepare a flexible budget for 180,000 iPhone 4’s you can either use exhibit 1 and values and multiply them by the number of units, 180,000, or you can do what I did, which is take the values in the monthly budged section of exhibit 3 and multiply them by 9/10 which is the simplification of 180,000/200,000.
Here are all the values I calculated: Revenue:$37,116,000 Flash Memory:$4,860,000 Application Process:$1,935,000 Chips-Phone:$2,529,000 Gyroscope:$468,000 8 Other Chips:$12,771,000 Total Variable Costs From Materials:$22,563,000 Variable Supplies and Tools Labor:$11,256,300 Assembly and Packing:$2,359,800 Shipping:$190,800 Total Variable Costs:$36,369,900 Factory Rent:$400,000 Machine Depreciation:$150,000 Utility Fee and Taxes:$52,000 Supervision:$127,000 Total Fixed Costs:$729,000 Total Costs:$37,098,900 Net Income:$17,100.The variance for each respective value (in order) is to be indicated by an H or L. H meaning that the actual value is higher than the flexible budget value, and L meaning that the actual value is lower than the flexible budget value. The variances are 0 units, $360,000H, $389,000H, 0, 0, 0, $128,000L, $261,000H, $48,700H, $732,200H, $200H, $1,042,100H, 0, 0, 0, $7,000H, $7,000H, $1,049,100H, $689,100L.