...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 plant. Sarnia 2 is a relatively new facility, dedicated entirely to butyl production. The Antwerp plant makes both butyl and halobutyl. EROW¶s demand exceeds its manufacturing capacity, so EROW ³buys´ butyl from NASA. POLYSAR RUBBER GROUP NASA EROW SARNIA 1 PLANT Halobutyl SARNIA 2 PLANT Butyl ANTWERP PLANT Butyl & Halobutyl AGENDA Polysar Ltd. Introduction to Polysar Standard Costing Variance Analysis for Variable Costs Fixed Overhead Volume Variance Transfer Pricing POLYSAR 1a) What evidence do we have that Polysar is on a standard costing system? 1b) Interpret the amount $22,589 on Exhibit 2, for variable costs. 1c) Interpret the amount $21,450 on Exhibit 2, for variable costs. POLYSAR 1d) Evaluate NASA¶s performance relative to budget for sales price and volume. 1e) Evaluate NASA¶s performance relative to budget for plant efficiency, raw materials prices, fixed manufacturing expenses, and non-manufacturing expenses. POLYSAR 1a) What evidence do we have that Polysar is on a standard costing system? Product...
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...“ Polysar Ltd Case” Brief Introduction to Polysar Limited Polysar Limited is the Canada’s largest chemical company and the world’s largest producer of synthetic rubber and latex and a major producer of basic petrochemicals and fuel products. The organization is structured into three groups: petrochemicals, rubber and diversified products; the rubber group accounts for 46% of Polysar’s sales, whose main products are butyl and halobutyl, and whose principal customers are tire manufacturers. Rubber group is composed by two divisions NASA (North America & South America) and EROW (Europe & elsewhere); Butyl is produced by NASA at its Sarnia 2 plant, and by EROW at its Antwerp plant. EROW’s demand exceeds its manufacturing capacity, so EROW “buys” butyl from NASA. Presentation This presentation aims to explain to the board of directors the results of operations for NASA Rubber Division for the first nine months of 1986, it is important that this presentation integrates reports since the reading of data alone is not sufficient to evaluate firm’s performance. In fact, according to data in statements, in the first 9 months results are not as good as expected, and this would entail a negative evaluation of the NASA’s management team, but the team worked well. The main problem lies in the transfer of costs. Polysar uses a cost-based transfer price, in particular a full cost transfer price including both variable and fixed costs; the system is based on budgeted...
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...In 1986, Polysar Limited was Canada’s largest chemical company with $1.8 billion in annual sales. Based in Sarnia, Ontario, Polysar was the world’s largest producer of synthetic rubber and latex and a major producer of basic petrochemicals and fuel products. The results for NASA Rubber division for the first nine months were not as good as expected. Sales volume was up and feedstock costs were down resulting in a gross margin that was better than budget. The fixed costs of the butyl rubber plant were high. The plan had yet reach to the capacity. The European Division had taken less output than projected. Pierre Choquette needs to work on a strategy for the Board presentation. The operations of the company were structured into three groups basic petrochemicals, rubber, and diversified products. As the largest Group in the company, Rubber Group produced 46% of Polysar sales. Rubber products, such as butyl and halobutyl, were sold primarily to manufacturers of automobile tires; others uses included belting, footwear, adhesives, hose, seals, plastics modification, and chewing gum. The Rubber Group was split into 2 operating divisions that were managed as profit centers: NASA (north and south America) and Erow (Europe and rest of world). In addition to the two operating profit centers, the Rubber Group included a Global Marketing Department and a Research Division. The costs of these departments were not charged to the 2 operating profit centers, but instead were charged...
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...Background: Polysar Limited is the Canada largest chemical company Primary products of rubber products are sold to manufactures of automobile tires. The organization is structured into three groups: petrochemicals, rubber and diversified products. Rubber group accounts for 46% of Polysar sales and has two divisions, which are NASA (North and South America) and EROW (Europe and rest of World). NASA manufactured Butyl known as Sarnia 2 plant. EROW manufactured Antwerp plant, which makes both butyl and halobutyl. Sarnia 2, manufactured by NASA, is a relatively new facility, dedicated entirely to butyl production. Since regular butyl demands over the plant’s remaining capacity, so EROW “buys” butyl from NASA. Problem: The problem is how Pierre Choquette, as Vice-President of the NASA Rubber Division, explain to board why the report shows the results that their division did not good as expected and they run business on return on net assets which looks ridiculous for NASA, but actually the results to factors are outside their control. Analysis: NASA’s budgeted rate for allocating manufacturing overhead costs to Butyl is $700 per tonne ($44,625,000/ 85,000 *9/12). Because fixed costs were allocated to production based on a plant’s “demonstrated capacity” using the following formula (standard fixed cost per ton = estimated annual total fixed cost ÷ annual demonstrated plant capacity). The components of transferring to FG inventory, to EROW are already closed out into “Cost Adjustments”...
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...Profiting the Crown Chapter 1 – Poor by Nature * Natural rubber: discovered by Europeans in the “New World” * Goodyear’s discovery of mixing rubber with sulphur and applying heat (made it resistant to temperature) * Became widely used in a variety of industries in Western world; at home and in factories (6-7) * Natural rubber trees only grew in warm, wet climates – not ideal for Canada, had to import from many foreign regions (7-8) * Usage of rubber grew within Canada exponentially (8-9) * Rubber manufacturing began after First World War, mainly footwear + clothing (9) * Experienced rapid growth within the industry in first two decades (10) * Consolidated Rubber Company (1906) founded by Max Aitken, combining six leading rubber plants amalgamation (10) * American rubber companies moved into Canada – accounted for 2/3 (11) * Tariffs played vital role in market – limited imports and were aimed to increase national levels or production + promote self sufficiency (11) * Americans built subsidiaries in Canada to avoid tariff (11) * Rubber industry increasingly centralized, foreign-owned + controlled (11) * Canadian rubber industry expanded significantly prior to second world war (12) * Prewar period (WWII) + consumption of cars made rubber industry a necessity (12) * Dunlop invented air + rubber tire (1849) – very successful (13) * Rubber still imported from overseas – created very high expenses (13) * Massive scientific...
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...(http://www.thecasesolutions.com/) (http://www.thecasesolutions.com) Posted on Home (http://www.thecasesolutions.com) >> Business Case Studies (http://www.thecasesolutions.com/business-case-solutions) >> American Greetings ← Previous Post (http://www.thecasesolutions.com/simons-hostile-tender-for-taubman-22197) Next Post→ (http://www.thecasesolutions.com/yokohama-corp-ltd-a-22201) American Greetings Harvard Case Solution & Analysis AN INDUSTRY IN DECLINE Greeting card industry was faced massive changes as it had attained maturity and was now in decline. Overall greeting card sales had been contracting in the U.S. for some years and negative growth was expected in the next five years to 2015 (Exhibit 4). Hallmark was the largest card company in the U.S. that was privately owned by the Hall family with $4 billion of revenues. The organization had expanded its operations in more than hundred nations and thus it was well-diversified geographically. Overall, the U.S. card industry was contracting with 9% reduction in last six years and the trend was expected to continue with a minimum of 4% decline over next 4 years and 16% in a worst case scenario. Major cause and diver of this decline in demand was changing social interaction norms and advent of alternative forms of communications through social networking and digital imaging. Increase in use of these alternatives by the populace to express their love and keep in touch with their close ones was reducing the need to send paper based...
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...Seligram, Inc.: Electronic Testing Operations 1. What caused the existing system at ETO to fail? 2. Calculate the reported cost of the five components listed in Exhibit 6 using: a. The existing system. b. The system proposed by the accounting manager. c. The system proposed by the consultant. 3. Which system is preferable? Why? 4. Would you recommend any changes to the system you prefer? Why? 5. Would you treat the new machine as a separate cost center or as a part of the main test room? Bridgeton Industries: Automotive Component & Fabrication Plant 1. The official overhead allocation rate used in the 1987 model year strategy study at the Automotive Component and Fabrication Plant (ACF) was 435% of direct labor cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? 2. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? 3. Consider two products in the same product line: Product 1 Product 2 Expected Selling Price $62 $54 Standard Material Cost 16 27 Standard Labor Cost 6 3 Calculate the expected gross margins as a percentage of selling price on each product based on the 1988 and 1990 model year budgets, assuming selling price remains constant and material/labor costs do not...
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...TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts in the strategy of the firm. In particular, we see how certain businesses are made to look inappropriately attractive or unattractive. Cost Behavior, Capacity Analysis and the Downward Demand Spiral Case: Bridgeton Industries: Automotive Component & Fabrication Plant Case Description: Bridgeton Industries was experiencing reduced sales. To become more competitive it introduced a classification procedure for products based upon their productivity and other factors. Products were classified into three groups: world class, potentially world class, and non-world class. The firm outsources the non-world class products. This outsourcing causes the costs on the remaining products to increase because some fixed costs associated with the outsourced products did not go away. These residual costs caused more products to become non-world class and hence candidates for outsourcing...
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...TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts in the strategy of the firm. In particular, we see how certain businesses are made to look inappropriately attractive or unattractive. Cost Behavior, Capacity Analysis and the Downward Demand Spiral Case: Bridgeton Industries: Automotive Component & Fabrication Plant Case Description: Bridgeton Industries was experiencing reduced sales. To become more competitive it introduced a classification procedure for products based upon their productivity and other factors. Products were classified into three groups: world class, potentially world class, and non-world class. The firm outsources the non-world class products. This outsourcing causes the costs on the remaining products to increase because some fixed costs associated with the outsourced products did not go away. These residual costs caused more products to become non-world class and hence candidates for outsourcing...
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...TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts in the strategy of the firm. In particular, we see how certain businesses are made to look inappropriately attractive or unattractive. Cost Behavior, Capacity Analysis and the Downward Demand Spiral Case: Bridgeton Industries: Automotive Component & Fabrication Plant Case Description: Bridgeton Industries was experiencing reduced sales. To become more competitive it introduced a classification procedure for products based upon their productivity and other factors. Products were classified into three groups: world class, potentially world class, and non-world class. The firm outsources the non-world class products. This outsourcing causes the costs on the remaining products to increase because some fixed costs associated with the outsourced products did not go away. These residual costs caused more products to become non-world class and hence candidates for outsourcing...
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...Harvard Business School Publishing Case Map for Horngren, Foster & Datar: Cost Accounting: A Managerial Emphasis, 10th Edition (Prentice Hall) This map was prepared by an experienced editor at HBS Publishing, not by a teaching professor. Faculty at Harvard Business School were not involved in analyzing the textbook or selecting the cases and articles. Every case map provides only a partial list of relevant items from HBS Publishing. To explore alternatives, or for more information on the cases listed below, visit: www.hbsp.harvard.edu/educators Case Title Institution, HBSP Product Number, Length, Teaching Note Geographical and Industry Setting, Company Size, Time Frame Abstract, Key Subjects PART ONE: COST ACCOUNTING FUNDAMENTALS Chapter 1: The Accountant’s Role in the Organization Chapter 2: An Introduction to Cost Terms and Purposes Carver HBSP United States, Consulting Co. #199006 consulting, 10,000 7p employees, 1994 Daniel Dobbins Distillery, Inc. HBSP #189065 7p TN #189172 Tennessee, liquor distillery, 1988 The managing partner of a relatively new consulting firm is concerned because training costs at the firm's new training center are higher than expected. Analysis of actual costs compared to those expected is required. In addition, he is considering capitalizing some training costs for later amortization. A management control system for the center is also a priority. A distiller increases whiskey production and income declines because of accounting...
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...Ingredient Branding Philip Kotler· Waldemar Pfoertsch Ingredient Branding Making the Invisible Visible Professor Philip Kotler Kellogg Graduate School of Management Northwestern University Evanston, IL 60208, USA p-kotler@kellogg.northwestern.edu Professor Waldemar Pfoertsch China Europe International Business School 699 Hongfeng Rd. Shanghai 201206, China wap@ceibs.edu e-ISBN 978-3-642-04214-0 ISBN 978-3-642-04213-3 DOI 10.1007/978-3-642-04214-0 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2010926489 © Springer-Verlag Berlin Heidelberg 2010 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Germany Printed...
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