Revenue and Volume Variance

Polysar CASE conference 3 Polysar Limited Established on 1942, Now diligent 6,650 people Structure Basic Petrochemicals, Rubber, Diversified Products Rubber Group is Profit Center Rubber Group produced 46% of Polysar sales Group 3 2/13 NASA Sarnia 1 Plant Produce Butyl & HaloButyl HaloButyl (from 1984) Sarnia 2 Plant Produce Butyl (operation 1984) 1) 1984 95,000 t 2) 1985 65,000 t EROW Antwel plant Produce Butyl & HaloButyl (1964, 1979 modified) 1) 1981 Prduced Butyl(75%) & HaloButyl(25%) 2) 1985 Prduced Butyl(50%, 45,000t), HaloButyl(50%, 45,000t) steer NASA to ERROW Butyl(21,000t)Group 3 3/13 Q1. The meaning and accuracy of the volume variance. NASA Rubber Division? Sales Performance(1986) Actual Net sales Revenue 63,239,000 cipher 58,660,000 Deviation 4,579,000 exceed 3,735,000 exceed uncouth Margin ? Sales Volume Up 40,945,000 37,210,000 ? Feedstock Cost Down Group 3 4/13 NASA Rubber Division Net persona(1986) Actual Budget Deviation Volume Va riance 11,375,000 -6,125,000 5,250,000 U Gross Profit / NSR 8. 2% 13. 7% -5. 5% Net Contribution 876,000 2,005,000 -2,881,000 Group 3 5/13 Volume Variance ? Volume Standard Fixed ? Actual Tonnes Produced Variance Cost Per Tonne ? ( + Demonstrated Capacity ) (? ) Sarnia 2 (1984) ? ? NASA to EROW Group 3 6/13 Q2. The best sales and production strategy for EROW Division, NASA Division and the Rubber Group in Total. EROW Division Strategy Transfer Advantage (From NASA) Feedstock Halobutyl ( )? Group 3 7/13 Accurate Budgeting NASA Division Strategy Volume Variance? NASA? Not Transfer Reach Capacity SARNIA 2? Production Capacity? 95,000? (1984) 65,000(1986)? Group 3 8/13 The Rubber Group Strategy Be a leader in gritty margin, specialty rubbers Main Strategy , ? 1) Transfer? (Regional Service) 2) 3) ? Group 3 9/13 Q3. Management accounting performance system to improve the reporting and evaluation of the Rub ber Group performance leave be raised. Strategy Group 3 10/13 Strategy ? ? Transfer Transfer ? Negotiation Price Group 3 11/13 ( ) Strategy SARIN 2 Product Volume Variance N N N Gross Profit / NSR E N Net Contribution E 1986 65,000 t 1987 95,000 t Improve 35,000 t 5,250,000 11,375,000 -6,125,000 8. 2% 35. 7% 876,000 22,661,000 13. 7% 5. 5% 35. 7% 2,005,000 22,661,000 2,881,000 Be a leader in high margin, specialty rubbers Group 3 12/13 The End