Danshui Plant No.2
INTRODUCTION
DANSHUI Plant No.2 is located in southern China was a contract manufacturer that assembled electronic products for companies wishing to save labor costs. DANSHUI was getting a one-year contract with apple Inc. to assemble 2.4 million iPhones. It was very anxious when in the first three months of the contract, the plant is unable to be assembled as many as the expected and its operating at a loss.
The plant has had difficulty hiring enough workers despite raising wages to 35%. In addition, the process of assembling is complex and required almost entirely based on handwork by 325 workers, with 140 steps involving 100 components during 5 days. The DANSHUI controller considers preparing a “flexible budget” whether it is more useful to help them identify the misinterpreting their performance. Li also must analyze the currently static budget have been used and prepare a summary of monthly operations to identify what goes wrong in their operations that contribute to the performance problems.
If DANSHUI not analyzed the sources of problem and find the alternatives ways, it will contribute to disability in performing the contract and in the long term will lead to inefficiency of controlling the cost of materials, labor and overhead. This is in order to provide incentive to control all costs whether caused by use waste, damage theft or inefficiencies.
ISSUE/PROBLEM
DANSHUI Plant has faced an important issue, that is trying to solve the shortage of production line in the first three month and too caught up with the Apple IPhone 4 contract in the rest of the nine month.
As we can know that after having report from the plant operation, DANSHUI Plant is not meeting with the targeted production line, with is shortage about 10% from the targeted amount. Although DANSHUI manage to produce up to 90% of the contract, but the shortage 10% has result DANSHUI to face loss about $672,000 rather than profit $100,000.
For the first three month, DANSHUI
DANSHUI Plant No.2 is located in southern China was a contract manufacturer that assembled electronic products for companies wishing to save labor costs. DANSHUI was getting a one-year contract with apple Inc. to assemble 2.4 million iPhones. It was very anxious when in the first three months of the contract, the plant is unable to be assembled as many as the expected and its operating at a loss.
The plant has had difficulty hiring enough workers despite raising wages to 35%. In addition, the process of assembling is complex and required almost entirely based on handwork by 325 workers, with 140 steps involving 100 components during 5 days. The DANSHUI controller considers preparing a “flexible budget” whether it is more useful to help them identify the misinterpreting their performance. Li also must analyze the currently static budget have been used and prepare a summary of monthly operations to identify what goes wrong in their operations that contribute to the performance problems.
If DANSHUI not analyzed the sources of problem and find the alternatives ways, it will contribute to disability in performing the contract and in the long term will lead to inefficiency of controlling the cost of materials, labor and overhead. This is in order to provide incentive to control all costs whether caused by use waste, damage theft or inefficiencies.
ISSUE/PROBLEM
DANSHUI Plant has faced an important issue, that is trying to solve the shortage of production line in the first three month and too caught up with the Apple IPhone 4 contract in the rest of the nine month.
As we can know that after having report from the plant operation, DANSHUI Plant is not meeting with the targeted production line, with is shortage about 10% from the targeted amount. Although DANSHUI manage to produce up to 90% of the contract, but the shortage 10% has result DANSHUI to face loss about $672,000 rather than profit $100,000.
For the first three month, DANSHUI
References: i) How to Calculate Total Cost in Economics | eHow.com http://www.ehow.com/how_6201642_calculate-total-cost-economics.html#ixzz2PryO0OD9 ii) http://www.google.com.my/#hl=ms&q=how++company+recognized+revenue+based+upon+FOB+contract%3F&oq=how++company+recognized+revenue+based+upon+FOB+contract%3F&gs_l=serp.3...441582.476078.14.477609.57.41.0.3.3.1.1984.10543.12j13j7j3j1j1j1j1j1.40.0...0.0...1c.1.8.serp.C6aJUxBdYKQ&bav=on.2,or.&bvm=bv.44770516,d.bmk&fp=944a8501217e5f2c&biw=1280&bih=699