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  • August 2012
  • Case
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Danshui Plant No. 2

By: William Bruns, Julie H. Hertenstein and Kelvin Liu
  • Format:Print
  • | Language:English
  • | Pages:5
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Abstract

Danshui Plant No. 2 in southern China has a one-year contract with Apple Inc. to assemble 2.4 million iPhones. In the first three months of the contract, the plant is unable to assemble as many phones as expected and is operating at a loss. The plant manager must analyze the budget and prepare a summary of monthly operations to help identify the source of performance problems. The plant has had difficulty hiring enough workers despite raising wages over 30%. In addition, the assembly process for an iPhone is complicated, with 140 steps involving over 100 components. The plant manager considers whether a flexible budget would be more useful for uncovering problems than the static budget currently being used. Students must perform breakeven and flexible budget analyses and calculate price and usage variances as they consider solutions for the plant's problems with the iPhone contract. This case, which explores the challenges of outsourcing manufacturing, can be used as an introduction to managerial accounting.

Keywords

Job Cuts and Outsourcing; Production; Budgets and Budgeting; Manufacturing Industry; Electronics Industry; China

Citation

Bruns, William, Julie H. Hertenstein, and Kelvin Liu. "Danshui Plant No. 2." Harvard Business School Brief Case 913-525, August 2012.
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About The Author

William J. Bruns

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Related Work

    • August 2012
    • Faculty Research

    Danshui Plant No. 2 (Brief Case)

    By: William J. Bruns, Julie H. Hertenstein and Kelvin Liu
Related Work
  • Danshui Plant No. 2 (Brief Case) By: William J. Bruns, Julie H. Hertenstein and Kelvin Liu
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