Danshui Plant No.2 Essay

Background Danshui was a contract maker assembling electronic intersections in southerly China. There were many manufacturers like Danshui in China assembling move for the companies wishing to lay aside projection comprises. orchard apple tree assure with Danshui to assemble 2.4 million iPhones in sow No.2 with the expected high demand of this product in 2010. As a reach center, Plant No.2 was credited for each iPhone produced and shipped. The serve well of assembling was complex and required or so entirely base on handiwork for more than 100 components. Danshui was confident of its workers to suit the new tasks and extra workers could be engage and trained as needed. The iPhone 4 was the close successful product of Apple as more than 1.7 million units were sold in the first 3 days they were launched. However, the mark was operating at a injury because of the underproduction.Consequently, the controller of this form considered preparing the new compute showing us e a conciliatory budget strategy to identify what went ill-use in their operations that contribute to the achievement problems. Problems and issues The put has 2 big problems in terms of budgeting musical arrangement and labor force. Firstly, they were in bad military operation by development shopworn budgeting system. They were unable to meet the Apple contract, which was shortage 10% from the 200,000 targeted units, resulting in the leaving of $672,000 rather than the profit of $100,000. Actually, the plant was using the standard be system to treasure their performance, but it was not appropriate because the comparative quantities were different (180,000 and 200,000 units). That means the organic standard costs would be overstated compared to the total actual costs. Consequently, the activities under the standard costing system were all overstated efficiency, leash to the unfavorable net income.Secondly, the deficiency of qualify labor force excessively contrib uted to this problem. As the fictionalization of iPhone 4 was extremely complex, this would be higher chances of errors as the assembly operation was hand conduct by different workers with different skills and functional styles. This will indirectly cause a lot wastes in term of cost and time due to the carelessness and the lack of skill of the workers. The burden of the supervisors moldiness be growingd as they must film before guiding the workers, who were almost semi delicate. Although the plant had raised the wages to 30%, they tacit could not increase the number of labor force needed, which also contributed to the underproduction. On the otherwise hand, as the production line was based on handwork, the damage of 1000 rack memories in installation was unavoidable. Thus, the actual output signal must be 181,000 units instead of 180,000 units in their report.The replacement of the wastage had increased the cost that had led to the unfavorable variance of $389,000. Whe n the reckless jobs had been done, the workers must use the new tools and supplies, resulting in the increase of the production costs and cause an unfavorable performance. Recommendations For the short term, I exhort Danshui to alteration from using the standard costing system to the plastic budget system for performance evaluation purpose. By using the flexible budget will help them to compare results with adjustable budget and the variance depth psychology will be more accurate. This system also proves the unfavorable performance caused by the variance from variable costs of $1,041,200, which move analyze and evaluate the weaknesses in arrogant the variable cost which is flash memories, assembly and packaging expenses. For the long term period, they dumbfound to overcome the disadvantages from the labor forces. First of all, the plant should improve their salary policy.I recommend that they should motivate workers by setting a basic salary and offering pension if they compl ete their jobs well. Secondly, the plant should provide master copy training for labors. Through training, the labors can attend how to handle with care on the parts to avoid the wastage that will happen. This solution also assists managers to place the correct labor at the correct assembly parts to stifle the labor hours but still save the materials. Thirdly, the plant could hire more skilled supervisors who will able to response to the problems arises and contend how to motivate the labor to achieve the goal.