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Danshui Plant recommand for managemnt accounting perspective

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Danshui Plant recommand for managemnt accounting perspective
Danshui Plant No.2 is facing insufficient information for Wentao Chen, manager of Danshui Plant, to evaluate the performance of their production for the first quarter of their contract to assemble the Apple iPhone4. They were anxious as their target to produced 200,000 units of iPhone per month was unachievable as they could only produce 180,000 of units per month. Wentao Chan had called Jianye ma to request a summary of monthly operations, unfortunately Bingqian Li was uncomfortable with the report. In order to know what really going on, Li wants to prepare the flexible budget to compare the actual performance to the budget.
Use of flexible budget allows the management to have a control and real time monitoring of business operations. This is because, it is prepared with the different line values for different sales projections. Besides that, it is become useful planning tools and help to react to the changes more efficiently.
Since the company does not have enough information about the shortage of production of iPhone, the company still need to consider the possible causes of the problem. For examples, the problem may caused by the weaknesses of the plant that is used by the company to produce the iPhone. As we know before this, the plant is used to produce the computer hardware, and now it is used to produce the iPhone. Here, we can see that the capacity of the plant is unable to produce the iPhone. Besides, we know that the company need to produce more than 200,000 units of iPhone every month for the rest of 9 months dues to the shortage of the plant to produce the desired quantity of iPhone that being set by the company target, they should upgrade the maintenance of the plant that suits to assemble the iPhone.
Besides that, the company can outsource some of the part of the iPhone from other company so that they could focus on the assembling the process only. By doinfg this, more labor could be assigned to assemble the iPhone and as a result, the amount of
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