Katharine McKnight is the owner of Quality Bikes, a company that produces high quality cross-country bicycles. Quality Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle shops. For several years Quality Bikes has purchased titanium from suppliers in the supply chain. Quality Bikes uses titanium for the bicycle frames because it is stronger and lighter than other metals and therefore increases the quality of the bicycle. Earlier this year, Quality Bikes hired Michael Sweeney, a recent graduate from State University, as purchasing manager. Michael believed that he could reduce costs if he purchased titanium from an online marketplace at a lower price. (Click the icon to view the standard and actual information.) Read the requirements. Direct materials x Now compute the price and efficiency variances for direct materials. Label each variance as favorable (F) or unfavorable (U). Price Efficiency Data table Quality Bikes established the following standards based upon the company's experience with their previous suppliers. The standards are as follows: Requirements 1. Compute the direct materials price and efficiency variances. 2. What factors can explain the variances identified in requirement 1 ? Could any other variances be affected? 3. Was switching suppliers a good idea for Quality Bikes? Explain why or why not. 4. Should Michael Sweeney'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 McKnight to understand the causes of a variance before she evaluates performance? 5. Other than performance evaluation, what reasons are there for calculating variances? 6. What future problems could result from Quality Bikes' decision to buy a lower quality of titanium from the online marketplace