Polysar Case

12906 WordsJan 18, 201152 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…
This is the static budget number for variable costs (feedstocks, chemicals, energy). Since it is the static budget, it is based on the original, projected level of sales. From Exhibit 1, the projected level of sales was 33,000 tons. Hence, the standard cost per ton for variable costs, as of the beginning of the year, was $650 per ton ($21,450/33). POLYSAR How can the standard cost per ton for variable costs differ from the beginning of the year to the end of the year? I.e.: $650 per ton vs. $631 per ton. POLYSAR Product Costing and transfer Prices – Butyl rubbers were costed using standard rates for variable and fixed costs. Variable costs included feedstocks, chemicals, and energy. Standard variable cost per ton of butyl was calculated by multiplying the standard utilization factor (i.e., the standard quantity of inputs used) by a standard price

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