Polysar Case
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52 pages
Polysar Ltd.AGENDA
Polysar Ltd.
• Introduction to Polysar • Standard Costing • Variance Analysis for Variable Costs • Fixed Overhead Volume Variance • Transfer Pricing
AGENDA
Polysar Ltd.
• Introduction to Polysar • Standard Costing • Variance Analysis for Variable Costs • Fixed Overhead Volume Variance • Transfer Pricing
POLYSAR
• Canada’s largest chemical company. • The Rubber Group accounts for 46% of Polysar’s sales. • Primary products for this group are butyl and halobutyl. • Principal customers for these products are tire manufacturers. • Rubber Group has two divisions
– NASA (North America & South America) – EROW (Europe & elsewhere)
POLYSAR
• Butyl is manufactured by NASA at its Sarnia 2 plant, and by EROW at its Antwerp …show more content…
The $22,589 is in the “actual” column, and is the variable cost at standard. Therefore, it is based on the actual volume of output (i.e., sales), but uses the budgeted cost of the inputs (feedstocks, chemicals, and energy) per ton of output. The standard cost per ton for raw materials, averaged over the 9 months,was $631 per ton ($22,589/35.8). The $22,589 is equivalent to a flexible budget amount. It is the answer to the question: What should our input costs have been for our actual level of output (sales)?
POLYSAR
1c) Interpret the amount $21,450 on Exhibit 2, for variable costs.
E x hib it 2
N A S A R U B B E R D IV IS IO N R e g u la r B u t y l R u b b e r S t a t e m e n t o f N e t C o n t r ib u t io n S e p te m b e r 1 9 8 6
9 M o n th s e n d e d S ep t. 3 0 , 1 9 8 6 A c tu al ( ‘ 0 0 0 's ) S a le s R e v e n u e - T h i r d P a r t y - D ive r sifie d P r o d u c t G ro u p - T o tal D e l i ve ry C o s t N et S ales R e ve n u e V a ri a b l e C o s t s S tan d ar d C o s t A d ju stm e n ts E f fic ie n c y V a r ia n c e T o tal G ro s s M a rg i n - $ 6 5 ,8 1 6 6 ,0 - 2 ,7 6 3 ,2 7 6 3 9 3 2 0 2 3 9 9 4 1 4 B u dget ( ‘0 0 0 's ) 6 1 ,0 2 6 1 ,2 - 2 ,6 5 8 ,6 5 1 6 0 6 0 0 0 0 0 D e viatio n ( ‘ 0 0 0 's ) 4 ,8 2 5 4 ,7 2 19 4 ,5 7 - 1 ,1 3 5 24 84 2 0 2 3 9 9 4 1 4
-2 2 ,5 8 5 24 -2 2 ,2 9
-2 1 ,4 5 0 -2 1 ,4 5 0 3 7 ,2 1 0 -2 3 ,1 0 0 8 0 - 6 ,1 2 5 -2 9 ,1 4 5 8 ,0 6 5
4 0 ,9 4 5 -2 5 ,0 1 4 -1 1 ,3 -3
POLYSAR
1c) Interpret the amount $21,450 on Exhibit 2, for variable costs.
E x hib it 2
N A S A R U B B E R D IV IS IO N R e g u la r B u t y l R u b b e r S t a t e m e n t o f N e t C o n t r ib u t io n S e p te m b e r 1 9 8 6
9 M o n th s e n d e d S ep t. 3 0 , 1 9 8 6 A c tu al ( ‘ 0 0 0 's ) S a le s R e v e n u e - T h i r d P a r t y - D ive r sifie d P r o d u c t G ro u p - T o tal D e l i ve ry C o s t N et S ales R e ve n u e V a ri a b l e C o s t s S tan d ar d C o s t A d ju stm e n ts E f fic ie n c y V a r ia n c e T o tal G ro s s M a rg i n - $ 6 5 ,8 1 6 6 ,0 - 2 ,7 6 3 ,2 7 6 3 9 3 2 0 2 3 9 9 4 1 4 B u dget ( ‘0 0 0 's ) 6 1 ,0 2 6 1 ,2 - 2 ,6 5 8 ,6 5 1 6 0 6 0 0 0 0 0 D e viatio n ( ‘ 0 0 0 's ) 4 ,8 2 5 4 ,7 2 19 4 ,5 7 - 1 ,1 3 5 24 84 2 0 2 3 9 9 4 1 4
-2 2 ,5 8 5 24 -2 2 ,2 9
-2 1 ,4 5 0 -2 1 ,4 5 0 3 7 ,2 1 0 -2 3 ,1 0 0 8 0 - 6 ,1 2 5 -2 9 ,1 4 5 8 ,0 6 5
4 0 ,9 4 5 -2 5 ,0 1 4 -1 1 ,3 -3