Homework: HW $12$ Cost$-$level variance analysis

Pat $1$ of $9$

Question list

Question $1$

Question $2$

$($Click the icon to view the standard and actual information$)$

Read the reguirements $q,$

Requirement $1.$ Compute the direct materials price and efficiency variances.

Let's begin by calculating the cost for the actual input at the budgeted price

$\backslash$table$[[,$Actual input,$x,$Budgeted price,$=,$Cost$],[$Direct materials $($purchases$),,x,,=,],[$Direct materials $($usage$),,x,,=,]]$

Data table

Groovy Bikes established the following standards based upon the company's experience with their previous suppliers. The standards are as follows

Cost of titanium $$19$ per pound

Titanium used per bicycle $8$ bs$.$

Actual results for the first month using the online supplier of titanium are as follows:

Bicycles produced $300$

Titanium purchased $5,400lb.$ for $$91,800$

Titanium used in production

$3,900Ib$

Requirements

Compute the direct materials price and efficiency variances

What factors can explain the variances identified in requirement $1?$ Could any other variances be affectod?

Was switching suppliors a good idea for Groovy Bikes? Explain why or why not.

Should Michael Monachino's performance evaluation be based solely on price variances? Should the production manager's ovaluation be based solely on efficiency variances? Why is it imporlant for Katharine Stanley to understand the causes of a variance before she evaluates performance?

Other than performance evaluation, what reasons are there for caiculating variances?

What future problems could result from Groovy Bikes' decision to buy a lower quaity of titanium from the online marketplace?