Exhibit 1 Standard Variable Costs for iPhone 5 (US $)

Bill of materials (per unit)

Purchased chips:

Flash memory (Samsung) $27.00

Application processor
(Samsung) $10.75
Chip for phone (Infinion) $14.05
Gyroscope
(STMicroelectronics) $2.60
8 other purchased chips $70.95 $125.35

Variable supplies and tools $62.54

TOTAL $187.89
Labor:

Assembly and packaging $13.11

Shipping (per unit) $1.06

Exhibit 2 Budgeted Fixed Overhead per Month

Factory rent $400,000.00
Machine depreciation $150,000.00
Utility fee and local taxes $52,000.00
Supervision $127,000.00
Total Monthly fixed costs $729,000.00
 Exhibit 3 August 2010 preliminary Report on the Results of Oper

Monthly Budget
(200,000 units)

Revenue (transfer from Shenzhen) $41,240,000.00

Variable costs
Materials:
Flash memory (Samsung) $5,400,000.00
Application processor
(Samsung) $2,150,000.00
Chip for phone (Infinion) $2,810,000.00
Gyroscope
(STMicroelectronics) $520,000.00
8 other purchased chips $14,190,000.00

Variable supplies and tools $12,507,000.00

Sub-total $37,577,000.00
Labor:
Assembly and packaging $2,622,000.00
Shipping $212,000.00

TOTAL VARIABLE COSTS $40,411,000.00

FIXED COSTS
Factory rent $400,000.00
Machine depreciation $150,000.00
Utility fee and local taxes $52,000.00
Supervision $127,000.00
Total Monthly fixed costs $729,000.00
TOTAL COSTS $41,140,000.00

NET INCOME $100,000.00

Report on the Results of Operations

Actuals at 180,000 Variance (20,000

units units)

$37,476,000.00 -$3,764,000.00

$5,249,000.00 $151,000.00

$1,935,000.00 $215,000.00
$2,529,000.00 $281,000.00

$468,000.00 $52,000.00
$12,643,000.00 $1,547,000.00

$11,305,000.00 $1,202,000.00

$34,129,000.00 $3,448,000.00

$3,092,000.00 -$470,000.00
$191,000.00 $21,000.00

$37,412,000.00 $2,999,000.00

$400,000.00 $0.00
$150,000.00 $0.00
$52,000.00 $0.00
$134,000.00 -$7,000.00
$736,000.00 -$7,000.00
$38,148,000.00 $2,992,000.00

-$672,000.00 -$772,000.00
Number of units
Budgeted revenue
Sale price per unit

Budgeted variable costs

Bill of materials (per unit)
Purchased chips:
Flash memory (Samsung)
Application processor (Samsung)
Chip for phone (Infinion)
Gyroscope (STMicroelectronics)
8 other purchased chips

Variable supplies and tools

TOTAL
Labor:
Assembly and packaging
Shipping (per unit)

Budgeted Fixed Overhead per Month

Factory rent
Machine depreciation
Utility fee and local taxes
Supervision
Total Monthly fixed costs

Sale price per unit

Total variable costs
Contribution margin

Break even volume

 200,000
$41,240,000.00
QUESTION NO. 2
Monthly Budget
(200,000 units)

Number of units 200,000

Revenue (transfer from Shenzhen) $41,240,000.00
Sales price per unit

Variable costs
Materials:
Flash memory (Samsung) $5,400,000.00
Application processor (Samsung) $2,150,000.00
Chip for phone (Infinion) $2,810,000.00
Gyroscope (STMicroelectronics) $520,000.00
8 other purchased chips $14,190,000.00

Variable supplies and tools $12,507,000.00

Sub-total $37,577,000.00
th Labor:
$400,000.00 Assembly and packaging $2,622,000.00
$150,000.00 Shipping $212,000.00
$52,000.00
$127,000.00 TOTAL VARIABLE COSTS $40,411,000.00
$729,000.00 FIXED COSTS
Factory rent $400,000.00
Machine depreciation $150,000.00
Utility fee and local taxes $52,000.00
Supervision $127,000.00
Total Monthly fixed costs $729,000.00

TOTAL COSTS $41,140,000.00

Gross Margin
Gross margin perentage
UESTION NO. 2
Price/Cost per Actuals at 180,000 Price/Cost per
unit units unit

180,000
$37,476,000.00

$5,249,000.00
$1,935,000.00
$2,529,000.00
$468,000.00
$12,643,000.00

$11,305,000.00

$34,129,000.00

$3,092,000.00
$191,000.00

$37,412,000.00

$400,000.00
$150,000.00
$52,000.00
$134,000.00
$736,000.00

$38,148,000.00
 QUESTION NO. 3

Flexible budget
Actuals variance
Number of units 180,000

Revenue (transfer from Shenzhen) $37,476,000.00

Variable costs
Materials:
Flash memory (Samsung) $5,249,000.00
Application processor (Samsung) $1,935,000.00
Chip for phone (Infinion) $2,529,000.00
Gyroscope (STMicroelectronics) $468,000.00
8 other purchased chips $12,643,000.00

Variable supplies and tools $11,305,000.00

Sub-total $34,129,000.00
Labor:
Assembly and packaging $3,092,000.00
Shipping $191,000.00

TOTAL VARIABLE COSTS $37,412,000.00

contribution margin $64,000.00
FIXED COSTS
Factory rent $400,000.00
Machine depreciation $150,000.00
Utility fee and local taxes $52,000.00
Supervision $134,000.00
Total Monthly fixed costs $736,000.00

TOTAL COSTS $38,148,000.00

NET INCOME -$672,000.00

Budgeted price of flash memory

Actual price of flash memory
Budgeted quanity of flash
memory for 180,000 units

Actual quantity of flash

memory for 180,000 memories
QUESTION NO. 3

Flexible Budget Sales Volume Variance Static Budget

200,000

$41,240,000.00

$5,400,000.00
$2,150,000.00
$2,810,000.00
$520,000.00
$14,190,000.00

$12,507,000.00

$37,577,000.00

$2,622,000.00
$212,000.00

$40,411,000.00
$829,000.00

$400,000.00
$150,000.00
$52,000.00
$127,000.00
$729,000.00

$41,140,000.00
$100,000.00
 Static Budget
Variance (20,000
units)

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
 MATERIAL VARIANCES FOR FLASH MEMORIES
MATERIAL PRICE VARIANCE (budgeted price - actual price) * Actual quantity

MATERIAL USAGE VARIANCE (budgeted quantity for 180,000 units - actual quantity

SALES PRICE VARIANCE

OVERHEAD SPENDING VARIANCE

overhead spending variance (budgeted OH - Actual OH)

LABOR RATE AND EFFICIENCY VARIANCE

Flexible budget varince for labour

labor rate variance

labor efficiency variance
e - actual price) * Actual quantity

ntity for 180,000 units - actual quantity used)*Budgeted price

- Actual OH)