Katharine Stanley is the owner of Groovy Bikes, a company that produces high quality cross-country bicycles. Groovy Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle shops. For several years Groovy Bikes has purchased titanium from suppliers in the supply chain. Groovy 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, Groovy Bikes hired Michael Gammaro, 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. E: (Click the icon to view the standard and actual information.) Read the requirements. Data Table 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. Cost Actual input 6,000 5,000 Budgeted price 18 $ 18 Groovy Bikes established the following standards based upon the company's experience with their previous suppliers. The standards are as follows: Direct materials (purchases) Direct materials (usage) $ 108,000 x $ Cost of titanium 90,000 $18 per pound = Titanium used per bicycle 8 lbs Actual results for the first month using the online supplier of titanium are as follows: Next determine the formula and calculate the cost for the flexible budget. Budgeted input for actual output Direct materials 4.000 $ x Budgeted price = Flexible budget cost $ 72,000 500 X 18 Bicycles produced Titanium purchased Titanium used in production Now compute the price and efficiency variances for direct materials. Label each variance as favorable (F) or unfavorable (U). 6,000 lb. for $96,000 5,000 lb. Price Efficiency variances variances Print Done Direct materials F U