Polysar Case

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