Exhibit 1 Standard Variable Costs for iPhone 4 (U.S.

Dollars)

Bill of materials (per unit)

Purchased chips:

Flash memory (Samsung) $27.00

Application processor (Samsung) 10.75

Chip for phone calls (Infinion) 14.05

Gryoscope (STMicroelectronics) 2.6

8 other purchased chips 70.95

$125.35
Variable supplies and tools 62.54
187.89
Labor:
Assembly and packaging (per unit) 13.11

Shipping (per unit) 1.06

VC/pu
202.06
 Exhibit 2
Budgeted Fixed Overhead per Month

Factory rent $400,000

Machine depreciation 150,000
Utility fee and local taxes 52,000
Supervision 127,000
Monthly fixed costs $729,000
Exhibit 3
August 2010 Preliminary Report on the Results of Operations (Thousands of U.S. Dollars)
Monthly Budget Actual Variance
(200000 units) (180000 units) (20000 units)

Revenue (transfer from Shenzhen) 41,240 37,476 3764 U

Variable costs
Materials
Flash memory 5,400 5,249 151 F
Application process 2,150 1,935 215 F
Chips—phone 2,810 2,529 281 F
Gyroscope 520 468 52 F
8 other chips 14,190 12,643 1,547 F
Variable supplies and tools 12,507 11,305 1,202 F
Subtotal 37,577 34,129 3,448F
Labor
Assembly and packaging 2,622 3,092 470 U
Shipping 212 191 21 F
Total variable costs 40,411 37,412 2,999 F
Fixed Costs:
Factory rent 400 400 --
Machine depreciation 150 150 --
Utility fee and taxes 52 52 --
Supervision 127 134 7U
Total fixed costs 729 736 7U
Total costs 41,140 38,148 2,992 F
Net income $ 100 $ (672) $ 772 U
f U.S. Dollars)
1.       Using budget data, how many Apple iPhone 4’s would have to have been completed for Danshui Plant No. 2 to break even

No of units assembled 200000

Revenue 41240000 100%
Selling price per unit 206.20
Variable Cost per unit 202.06
Variable cost 40412000 97.99%
Fixed Cost 729000 1.77%
Total cost 41141000 99.76%
Net Income 99000 0.24%
Contribution Margin 828000 2.01%
Contribution Margin per unit 4.14
Break even point(volume) 176087
Break even point(value) 36309130 88.04%
i Plant No. 2 to break even?
       2.   Using budget data, what was the total expected cost per unit if all manufacturing and shipping overhead (bot
was the actual cost per unit of production and shippi

Budgeting costs
No of Units 200000

Variable Costs
Materials 37577000
Assembly and packaging 2622000
Shipping 212000
Total monthly Variable Cost 40411000

Fixed Costs
Factory rent 400000
Machine depreciation 150000
Utility fee and local taxes 52000
Supervision 127000
Total Monthly Fixed costs 729000

Total Monthly Cost 41140000

Expected Cost per unit $ 205.700

if all manufacturing and shipping overhead (both variable and fixed) were allocated to planned production? What
the actual cost per unit of production and shipping?

Actual Costs
No of Units 180000

Variable Costs
Materials 34129000
Assembly and packaging 3092000
Shipping 191000
Total monthly Variable Cost 37412000

Fixed Costs
Factory rent 400000
Machine depreciation 150000
Utility fee and local taxes 52000
Supervision 134000
Total Monthly Fixed costs 736000

Total Monthly Cost 38148000

Expected Cost per unit $ 211.933

3.       Prepare a flexible budget for 180,000 iPhone 4’s and calculate flexible budget variances using
actual costs for August.
August 2010 Preliminary Report on the Results of Operations (Thousands of U.S. Dollars)
Monthly Actual Variance Flexible
Budget Flexible
(200000 (180000 (20000 (180000 Variance U/F
units) units) units)
units)

Revenue (transfer from Shenzhen) 41,240 37,476 3764 U 37116 360 F

Variable costs
Materials
Flash memory 5,400 5,249 151 F 4860 -389 U
Application process 2,150 1,935 215 F 1935 0
Chips—phone 2,810 2,529 281 F 2529 0
Gyroscope 520 468 52 F 468 0
8 other chips 14,190 12,643 1,547 F 12771 128 F
Variable supplies and tools 12,507 11,305 1,202 F 11256.3 -49 U
Subtotal 37,577 34,129 3,448F 33819.3 -310 U
Labor
Assembly and packaging 2,622 3,092 470 U 2359.8 -732 U
Shipping 212 191 21 F 190.8 -0.20 U
Total variable costs 40,411 37,412 2,999 F 36369.9 -1,042 U
Fixed Costs:
Factory rent 400 400 -- 400 --
Machine depreciation 150 150 -- 150 --
Utility fee and taxes 52 52 -- 52 --
Supervision 127 134 7U 127 -7 U
Total fixed costs 729 736 7U 729 -7 U
Total costs 41,140 38,148 2,992 F 37098.9 -1,049 U
Net income $ 100 -672 $ 772 U 17.1 -689 U
4.      Estimate material price and usage for flash memories, labor rate and usage (efficiency) variances, and
the overhead spending variance for August.
ciency) variances, and