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Materials, labor, and overhead were his responsibility. This was done to provide incentive to control all costs whether caused by use waste, damage, theft, or inefficiencies.
The Apple iPhone 4
The iPhone 4 contained more than 100 components manufactured in plants located in Europe,
Asia, and the United States. For examples, Samsung supplied flash memories and application processors, and Infineon (a German chip maker) supplied chips that send and receive phone calls and data. A gyroscope, new to the iPhone 4, came from STMicroelectronics, based in Geneva, and a touch-screen module came from Taiwan. Contract manufacturers assembled these parts in assembly line plants that required each worker to focus on one or more tasks in a short period of time as each phone moved along an assembly line toward completion. Estimates of the material cost of each iPhone were around $180, assembly labor around 7% of total cost, and Apple’s profit margins about
60% of the selling price to customers. (See Exhibits 1 and 2 for estimated standard costs and overhead budgets for the Danshui Plant No. 2.)
The assembly process at Danshui Plant No. 2 was almost entirely based on handwork by …show more content…
The August Report
On September 2, Chen arrived at his office and found a report on August operations. (See Exhibit
3). The controller, Jianye Ma, had attached a note which Chen read with interest.
To:
Wentao Chen
From: Jianye Ma and Bingqian Li
Date: September 1, 2010
Per your request we have compiled a preliminary report on August operations. At first glance, revenue was below budget, material usage seems good, and labor costs were above budget. In terms of plant profit, our budget was $100,000, but we actually had a loss of $672,000. The main reason for the shortfall may be that we have been unable to produce 200,000 iPhone 4 units in any of the three months we have been working on this contract. Our major obstacle is hiring enough qualified labor to get production up to 200,000 units per month. We cannot find people to hire, even though we have raised our factory wages by almost 30% since July. (A friend at Foxconn in Shenzhen told Li that they raised their starting pay by 35% since March, and they are building new plants elsewhere where unemployment is high.)
In addition, we continue to have trouble with the Samsung flash memory
The Apple iPhone 4
The iPhone 4 contained more than 100 components manufactured in plants located in Europe,
Asia, and the United States. For examples, Samsung supplied flash memories and application processors, and Infineon (a German chip maker) supplied chips that send and receive phone calls and data. A gyroscope, new to the iPhone 4, came from STMicroelectronics, based in Geneva, and a touch-screen module came from Taiwan. Contract manufacturers assembled these parts in assembly line plants that required each worker to focus on one or more tasks in a short period of time as each phone moved along an assembly line toward completion. Estimates of the material cost of each iPhone were around $180, assembly labor around 7% of total cost, and Apple’s profit margins about
60% of the selling price to customers. (See Exhibits 1 and 2 for estimated standard costs and overhead budgets for the Danshui Plant No. 2.)
The assembly process at Danshui Plant No. 2 was almost entirely based on handwork by …show more content…
The August Report
On September 2, Chen arrived at his office and found a report on August operations. (See Exhibit
3). The controller, Jianye Ma, had attached a note which Chen read with interest.
To:
Wentao Chen
From: Jianye Ma and Bingqian Li
Date: September 1, 2010
Per your request we have compiled a preliminary report on August operations. At first glance, revenue was below budget, material usage seems good, and labor costs were above budget. In terms of plant profit, our budget was $100,000, but we actually had a loss of $672,000. The main reason for the shortfall may be that we have been unable to produce 200,000 iPhone 4 units in any of the three months we have been working on this contract. Our major obstacle is hiring enough qualified labor to get production up to 200,000 units per month. We cannot find people to hire, even though we have raised our factory wages by almost 30% since July. (A friend at Foxconn in Shenzhen told Li that they raised their starting pay by 35% since March, and they are building new plants elsewhere where unemployment is high.)
In addition, we continue to have trouble with the Samsung flash memory