Question 1

Details Monthly Budget

Units 200
Total Revenue $ 41,240.00
Total Variable cost $ 40,411.00
Total Fixed Cost $ 729.00

Selling Price Per unit $ 206.20

Variable Cost Per unit $ 202.06
Contribution Margin $ 4.14

Break Even Point 175875 Units

 Question 2

Budgeted Total Cost $ 41,140,000.00

Budgeted Production Unit 200000
Expected Cost Per Unit $ 205.70
Actual Total cost $ 38,148,000.00
Actual Prodution Units 180000
Actual Cost per Unit $ 211.93
 Monthly 2Lakh Actual 1.80 Lakh Variance 20K
Revenue 41240 37476 3764 U
Flash memory 5400 5249 151 F
Application process 2150 1935 215 F
Chips—phone 2810 2529 281 F
Gyroscope 520 468 52 F
8 other chips 14190 12643 1547 F
Variable supplies and tools 12507 11305 1202 F
Subtotal 37577 34129 3448 F
Labor 2622 3092 470 U
Assembly
Shipping and packaging 212 191 21 F
Total variable costs 40411 37412 2999 F
Fixed Costs: 400 400 --
Factory
Machinerent
depreciation 150 150 --
Utility fee and taxes 52 52 --
Supervision 127 134 7 U
Total fixed costs 729 736 7 U
Total costs 41140 38148 2,992 F
Net income 100 -672 772 U
Flexible Budget Varinace Performance
37116 360 F
4860 389 U
1935 0
2529 0
468 0
12771 -128 F
11256 49 U
33819 310 U
2360 732 U
191 0 U
36370 1042 U
400 0
150 0
52 0
127 7 U
729 7 U
37099 1049 U
17 -689 U
 Qusetion 4

Actual Price 5249000/181000 29

Flash Memory Price Variance
(AP-SP)*AQ
(29-27)*181000 362000 U

Flash Memory Usage

(AQ-SQ)*SP
(181000-180000)*27 27000 U

Total Memory Variance

362000+27000 389000 U

Actual Rate 3092000/180000 17.18

Labour rate Variance
(AR-SR)*Actual hours
(17.18-13.11)*180000 732600 U

Labour Efficiency Variance

(AH-SH)*Standard Rate
(180000-200000)*13.11 262200 F

Total Labour Variance

732600-262200 470400 U

Fixed Overhead Spending Variance

Actual Overhead- Standard Variance
736000-729000 7000 U
After calculating and analysing the data many interesting facts about the company • Increasing Wage
came out like that almost all the expenses of the companies were more than definitely increase
estimated. As the case study stated that the company faced heavy losses due to less introduced to the p
labour which got revealed after calculating the labour rate variance which came out span of time.
to be unfavourable. The main concern which the company should show should be the • Implement Piece
money spent on flash memories as this was considered to be the main reason behind in increasing the m
the losses faced by the company after throughly studying and examining the case is implemented it m
study given to me by my professor. The immediate step which should be taken by to increase costs fo
them is to reduce their costs and expenses which will initially result in higher profits. the standards, or th
more wastage.
• Implement Hour
production as more
hand, the labor is n
the same efficiency
process, hence incr
• Increasing Wages – This will attract more qualified labor to increase the output but will
definitely increase the costs by a higher percentage as the new workers will also have to be
introduced to the production process and given training to fulfill the demand in a very short
span of time.
• Implement Piece rate payment method – A change in the payment methods can contribute
in increasing the motivation of the workers to produce more. If piece rate payment method
is implemented it might lead to more number of iPhone units being produced, but can lead
to increase costs for the company as workers might rush and not make the iPhones as per
the standards, or they might not handle Samsung flash memory carefully, leading to even
more wastage.
• Implement Hourly rate payment method – Hourly rate can contribute in increased
production as more workers will be motivated to stay and work longer hours. On the other
hand, the labor is not very skilled, might just stick around to earn more and not work with
the same efficiency and all of this shall also lead to a slackness in the normal production
process, hence increasing the costs