Hubbell Policies

location (i.e. the cost from the location the product or product line is moving from). Distribution center standard costs should represent the standard cost of the primary source.

The frozen standard cost associated with parts that have been in-sourced since the last standard cost roll or out sourced since the last standard cost roll should not be rolled until the next annual standard cost roll.

Product Transfer and Costing: In case of a product transfer whether associated with a production transfer, decision to insource, or otherwise, no mid- year cost roll is to be done by the receiving plant. The receiving plant uses the sending plant’s standard cost or the outsource cost in the case of insource decisions, for the remainder of the fiscal year and will roll standards as normal during the following fiscal year. Documentation Requirements: Adequate documentation should be maintained to support the determination of the new standard cost each year, as well as the calculation of the year-end standard cost revision. All documentation should be readily available in case of audit or emergency review/ validation.

ADMINISTRATION

Roles and Responsibilities. Business Controllers have responsibility in overseeing compliance with this Policy.

Monitoring, Evaluation and Review. Internal audit will monitor compliance with this Policy on a regular basis. Additionally, periodic SOX testing will ensure compliance with this Policy.

Exceptions. Exceptions granted by the Business Controller and Corporate Controller must be retained by the business unit as supporting documentation.

ACCOUNTING AND DISCLOSURE

None.

REPORTING

Strict adherence to this Policy is essential for proper accounting and disclosure.

DEFINITIONS

CSA shall mean Canadian Standards Association.

ERP shall mean enterprise resource planning system.

FIFO shall mean the first-in-first-out inventory valuation method.

FX Rate shall mean the foreign currency exchange rate.

I/C shall mean intercompany.

ISO shall mean International Organization of Standardization.

LIFO shall mean the last-in-first-out inventory valuation method.

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