Polysar Limited Case

This report will provide insight on what your management team should do concerning production costs. We will examine 2 different scenarios and provide our decision as to which makes most sense. In the first scenario, the total fixed cost of the production is 1,000,000. In the second

Research and development – totaled $98,280.00 in year 7, and in years 7 to 8 decreased -16.3% or $15,996.00. This is weakness in sales and performance, but a smart decision because of the cut in R&D saved -16.3% or $15,996.00 that would have been looked at as profit. They were able to use the previous year’s investment on R&D.

NASA had a favorable spending variance of $498,000 this year which means they spent 498,000 less than budgeted. The actual fixed cost per ton was around $519/ton.

In the past 50 years, the National Aeronautics and Space Administration (NASA) has sent out many planned space exploration missions which have lead to numerous advantages in society and culture. NASA’s technologies benefit American lives with the innumerable important breakthroughs by creating new markets that have spurred the economy and changed countless lives in many ways. NASA is a federal agency and receives its fundings from the annual federal budget passed by the United States Congress. However, there are conflicting opinions that consider whether or not funding for NASA is a waste of government spending.

Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

Northrop Grumman manage and assess our business based on their performance under contracts and programs (typically two or more closely-related contracts). Sales from their portfolio of long-term contracts are primarily recognized using the cost-to-cost method of percentage of completion accounting, but in some cases the units-of-delivery method of percentage of completion accounting is utilized. As a result, sales tend to fluctuate in concert with costs incurred across our large portfolio of contracts. Due to Federal Acquisition Regulation (FAR) rules that govern our U.S Government business and related Cost Accounting Standards (CAS), most types of costs are allocable to U.S. Government contracts, and we do not focus on individual cost groupings (such as manufacturing, engineering and design labor costs, subcontractor costs, material costs, overhead costs and general and administrative costs), as much as we do on total contract cost, which is the key driver of our sales and operating income.

• Introduction to Polysar • Standard Costing • Variance Analysis for Variable Costs • Fixed Overhead Volume Variance • Transfer Pricing

The world today revolves around technology and is in an ever upward spiraling path of new advancements. This path is now at what some people call the “final frontier”, or the space age. The discoveries being made on this front are overwhelming in comparison to the technology that the world had only twenty years ago. Space exploration was once left up to the governments, as they battled to be the first country in space, but with national debts raising and the cuts made in response, space exploration is beginning to become new grounds for private business owners. Private companies are already beginning to send off rockets at a fraction of the cost that government does, but if more money was put into the government space program, then they

Overhead costs include rent, office staff, depreciation, and other. Once the flexible budget was complete, variances between the actual and flexible budget could be calculated (Exhibit B). The variance for frame assembly was favorable with actual costs being $82,663 less than in the flexible budget. The variances for wheel and final assembly however were both unfavorable. Wheel assembly had an unfavorable variance of $50,650, while final assembly variance was the highest at an unfavorable variance of $231,200. Taking into account these three aspects of direct cost, direct cost has an unfavorable variance $199,187. Although most overhead costs are fixed, 2/3 of other costs are variable and increase with the increased production. As shown in Exhibit B, overhead variance is unfavorable at $60,000. The direct cost variance and overhead variable together lead to a total unfavorable variance of $259,187.

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.

Andres was forced to import product from French division as he ran out of capacity several times due to new machines performing inadequately. This added an overhead expense of approximately 2147 (Additional maintenance costs + Transfer costs)

After closely reviewing the financial and production data, our accounting team has found that your traditional cost allocation is faulty and misleading. The costs of products A and C were over allocated and products B and D were under allocated causing deceptive information on the true profits of the company. Also, product B appears to be

This was actually the proper transfer pricing for the company in supplying to other division.

Although construction of additional berths involves huge cost, the same can probably generate returns if there is adequate demand

In Petrochemicals, Indianoil offers a full slate of items including Linear Alkyl Benzene (LAB), Purified Terephthallic Acid (PTA) and a broad reach of polymers. Indianoil holds a huge piece of the overall industry of LAB in India and fares to 19 nations. It is the biggest suppliers of Mono-Ethylene Glycol (MEG) in the household market. Execution of a state-of-the-craft 120,000 tons for every annum Styrene Butadiene Rubber (SBR) unit is underway at Panipat. The SBR unit is relied upon to further reinforce Indianoil's vicinity in the claim to fame petrochemicals area.