What would be the impact of the polysilicon cost increase on Canadian Solar’s gross profit and on its standard variances?

Canadian Solar Shortage of polysilicon used to make solar panels Cost of polysilicon has increased significantly because of environmental regulators in China shutting down several factories Selling price of solar panels has fallen

Question 1 How is gross profit calculated?

Question 2 What would be the impact of the increase in the cost of the polysilicon on Canadian Solar’s gross profit? Explain.

Question 3 What would be the impact of the decrease in the selling price of solar panels on Canadian Solar’s gross margin? Explain.

Question 4 Assume that Canadian Solar uses a standard costing system for tracking the production of its solar panels. What variance(s), if any, have been impacted by the increase in the cost of polysilicon? Explain.

Question Recap How is gross profit calculated? What would be the impact of the increase in the cost of the polysilicon on Canadian Solar’s gross profit? Explain. What would be the impact of the decrease in the selling price of solar panels on Canadian Solar’s gross margin? Explain. Assume that Canadian Solar uses a standard costing system for tracking the production of its solar panels. What variance(s), if any, have been impacted by the increase in the cost of polysilicon? Explain.

For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Questions or comments? Dr. Wendy Tietz at wtietz@kent.edu