Danshui Plant No.2 Essays
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 …show more content…
Furthermore, DANSHUI needed to apply the variance analysis to measure their business performance and to observe how well a business is performing and also how close actual costs and revenues are to expected costs and revenues. In accounting, a variance is defined as the difference between the expected amount and the actual amount of costs or revenues. The purpose of this detailed information is to assist DANSHUI in determining what may have gone right or wrong and to help the company in future