Danshui Case No. 2

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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: (1) flexible budget, (2) actual results, (3) variances, and (4) a column indicating whether a variance is favorable or unfavorable. Attach this table to the end of your write-up.
Question 4: You’ll calculate the following: (1) the price and usage variance for the flash memory material cost, (2) the price and usage variance for the labor cost, and (3) the total variance for the overhead cost.
Read the August Report (page 3) carefully. In this case, you don’t need the standard labor price information in order to calculate the labor price and usage variance. But, note that the standard labor price (or rate) is $0.92 per hour just in case you cannot figure out how to calculate the variances without using that information.
Question 5: Think about the various cost variances (i.e., materials, labor, overhead) you calculated. Which one(s) should be the major concern for the manager? What are the causes of these variances (i.e., price variance or efficiency variance)? How can the manager solve these issues? Also, how many units per month does the company need to produce for Apple? Has the company been able to meet that target? If not, what should the manager do in the next month or so to fulfill their contractual obligation? How would your proposed actions impact the profitability of the Danshui…...

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