Polysar Limited Case Essay

974 Words Nov 18th, 2012 4 Pages
Memo -------------------------------------------------

Background Polysar Limited is Canada’s largest chemical company. Its Rubber Group accounts for 46% of Polysar’s sales. The primary products for this group are butyl and halobutyl and the principal customers for these products are tire manufacturers. The rubber Group has two divisions: NASA (North America & South America) and EROW (Europe & elsewhere). There is product transferring between NASA and EROW and the Vice President of NASA is required to present the performance results to the Board of Directors and explain why the bottom line is lower than expected. Performance of
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There would be no budgeted volume variance, since $811/tonne x 55,000 tonnes = $44,625K After modifying the Fixed Cost Volume Variance, below we have a new Statement of Net Contribution with a positive Net Contribution of $4,414, which makes NASA as a division appear more profitable to Polysar.

Sales and Production Strategy for EROW, NASA and the Rubber Group The best strategy for the EROW Division is to produce at capacity, which they are already doing while they even continue to push the capacity limit. The best strategy for the NASA Division is to produce as much as possible and close to capacity to cover their fixed costs. It is profitable for the Rubber group as a whole to continue producing butyl and halobutyl. Why the EROW Division would order more

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