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2
Ankit Kumar Verma (2019PGP058)
Using the data given in Exhibit 1 & 2, estimate the break-even quantity for iPhone 4.
Production Cost
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 (STMicroelectronics) $ 2.60
8 other purchased chips $ 70.95
Variable supplies and tools $ 62.54
Labour:
Assembly and Packing (per unit) $ 13.11
Shipping (per unit) $ 1.06
Production Cost/Unit (a) $ 202.06
No. I don’t think that the exhibit 3 adequately captures variance because exhibit 3 compares the
budgeted and actual total cost to calculate the variance. The calculated variance is based on budgeted
and actual figures which do not have even the same number of units. This discrepancy in the number
of units makes the variance in exhibit 3 inaccurate.