Question

1 Requirements Data Table 1. Better Bikes established the following standards based upon the company's experience with their previous suppliers. The standards are as follows: Cost of titanium $ 17 per pound 4. Titanium used per bicycle 8 lbs. Compute the direct materials price and efficiency variances. What factors can explain the variances identified in requirement 1? Could any other variances be affected? Was switching suppliers a good idea for Better Bikes? Explain why or why not. Should Michael Scott's performance evaluation be based solely on price variances? Should the production manager's evaluation be based solely on efficiency variances? Why is it important for Katharine Stenback to understand the causes of a variance before she evaluates performance? Other than performance evaluation, what reasons are there for calculating variances? What future problems could result from Better Bikes' decision to buy a lower quality of titanium from the online marketplace? Actual results for the first month using the online supplier of titanium are as follows: Bicycles produced 700 6. Titanium purchased Titanium used in production 8,100 lb. for $129,600 7,100 lb.

Answer 1

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standard price Acaal price per pound $16 12er pound $124,600 8100 1bs bs per kicycle ,loolbs standard imput Actual input 1 to0 l0.143 l per bicyde std. price (Acual Actual Cuanti ay Pri ce Variance= t16-1a) x 10 143 10 142 Effcienty Yasiance= (Aclual Quart ty -standand puariaty) standand price (lo143-8)x1G 2443 x$6 34-28P