Prepare a flexible budget for 180,000 iPhone 4s, and calculate flexible budget variances using actual costs for August.

For the month of August, calculate the following variances (assuming the standard labor rate is $0.92 per hour):

1. Material price variance for flash memories
2. Material usage variance for flash memories
3. Labor rate variance
4. Labor usage (efficiency) variance
5. Overhead spending variance

What are some strategies or decisions that Wentao Chen should consider when trying to solve the problems with the Apple iPhone 4 contract in the next 9 months? How would these change the costs and profitability of Danshui Plant No. 2 and the iPhone 4 contract? Approach this from both Danshui's and Apple's point of view.

Bill of materials (per unit)
	Purchased chips:
		Flash memory (Samsung)				$     27.00
		Application processor (Samsung)				10.75
		Chip for phone calls (Infinion)				14.05
		Gyroscope (STMicoelectronics)				2.60
		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
Total Standard Cost per Unit							$  202.06

Factory rent				$         400,000
Machine depreciation				150,000
Utility fee and local taxes				52,000
Supervision				127,000
Monthly fixed costs				$         729,000
		Total revenue	Total units	Revenue per unit
Revenue per unit		$41,240,000	200,000	$            206.20
Standard cost per unit				202.06
Contribution margin per unit				$                  4.14
Break-even in units				176,087
Calculation of standard labor hours per unit:
Standard cost of labor per unit				$               13.11
Cost of direct labor per hour				0.92
Direct labor hours per unit				14.25	DLH per unit