Polysar

Polysar Limited--recent assignment. BACKGROUND Rubber Group is the largest of the three operating units of Polysar Limited. The primary users of its products, much(prenominal) as butyl and halobutyl, are manufacturers of automobile tires; other users are from non-homogeneous industries. In 1986, Rubber group contributed 0.8 billion which is 46 part of the company annual sale. The operation of the group is divided into iv familys, NASA (North America and South America) and EROW (Europe and rest of the world), Research department and orbiculate Marketing department. NASA and EROW operate as profit centers each constitute butyl and halobutyl dedicated to regional customers. Both of the centers have relatively flexile producing schedule to satisfy the increasing demand of halobutyl. After establishing the secondly jell in Sarnia, NASA is able to have each plant producing halobutyl and regular butyl. EROW, which has been running near capacity since 1980, solely instruction on the production of halobutyl. Any idle capacity is apply in manufacturing butyl. FINANCIAL PERFORMANCE ANALYSIS In 1986, Rubber NASA achieved a sale of approx. 66million which was 4.8million higher than the bud countenance. However, when came down to bottom line ( make contribution), the division ended up a loss of 876thousand. This was 2.8million lower than expected.

Comparatively, EROW did tumesce in all aspects with a sale of 89million and a net profit of 22.6million. Why did the two divisions with same products have such a difference? After further exam, management reason the large fixed cost absorbed sale figure. prime(prenominal) it is important to understand the ideal costing system utilize in Rubber group. Standard costing assigns quantity and legal injury standards to each component of variable and fixed costs in calculating the total cost. In the case of NASA, the system uses standard purchasing price (input cost) and standard inputs usage in shoot for for variable costs, and standard spending price (input cost) and standard... If you want to get a full essay, order it on our website: Ordercustompaper.com

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