manufacturers, distibutors, and oste bicycle cheps company that procuces high quality cross-country bicycles. Better Beves participates in a supply chain that consists of supplors. bicycle frames because it is stronger and lighter ther for several years Better Blkes has purchased titanium from supplers in the supply chain. Better Bikes tises titanium for the graduate from State Universify, as purchesing managet. Michael believed that he could reduce costs if he purchased thantum from an online marketplace at a lower price. (Click theicon to view the standard and actual infoemation.) Read the reguiremonts. 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. Now compute the price and officiency variances for direct materials. Label each variance as favorable (F) or unfavorable (U), Requirement 2. What factors can explain the variances identified in repuirement 17 Could any other variances be affected? The is due to the difference between the standard price based on the previous suppliers and the actual price paid through the online marketplace. Requirement 2. What factors can explain the vatiances identified in requirement 1 ? Could any other variances be alfected? The is due to the difference between the standard price based on the previous suppliers and the actual price paid through the online marketplace. The could be due to several factors including inexperienced workers, lower quality product, and machine ma/unctions. The variance could be affected if the lower qualty titanium caused the workers to use more time. Requirement 3. Was switching suppllers a good idea for Better Bikes? Explain why or why not Switching suppliers a good lides, The in the cost of titanulm was outweighed by the material usoge. In addation, the variance recognize the total impact of the lower quality titanium because only variance. Requirement 4. Should Michael Sweeney's performance evaluation be bosed solely on price variances? Sthould the production manager's evaluation be based solely on elficioncy variances? Why is it important for Katharine Hoffman to understand the couses of a variance belore she evaluates performance? The purchasing manager's performance evaluation be based solely on the price variance. The short ruati in purchiase costs was more than offset by Requirement 4. Should Michtael Sweeney's performance evaluation be based solely on price variances? Should the production manager's evaluation be based solaly on efficlency variances? Why is it important for Katharine Hotfman to understand the causes of a variance before she evaluates performance? Select the two statements that answet wity it is important for Katharine Hotlman to understand the causes of a variance before she evaluates performance. Hotfman should understand efficiency variances may arise for many ditterent reasons and she needs to know these reasons before ovaluating performance, It is important for Holfman to understand that all favorable meterial price variances are "good news", because they ate increasing profits. Holfman should understand efficiency variances may arse for only one reason and she needs to know that mason before evaluating performance. it is important for Hotlman to understand that not all tavorable material price varianoes are "good news", because of the negative olfects that can arise in the profuction process from the purchase of inferior inputs. Requirement 5. Other than performance evaluation, what reasans are thete for calculating variances? A. Variances shoula be used to help Better Bses understand what led to the currens set of financial resilts, as well as how to perform better in the future. 8. To use the variance information to negotiate lower pnces with suppitiors. C. Yariancos ace used to demand hioher oustrv matorials from suoblers ot the same cost that Beltar B Kes oxvs now. Requirement 5. Other than performance evaluation, what reasons are there for calculating variances? A. Varlances should be used to heip Better Bikes understand what led to the cuerent eot of financial results, as woll as how to porform better in the future. B. To use the variance information to negotiate lower prices with suppliers. C. Variances are used to demand higher quality materials from suppliers at the same cont that Betier Bket pays now. Requirement 6. What future problems could result from Batier Bkes' decision to buy a kower quabity of titanium trom the online marketplace? A. Future problems cen arise in the supply chain, Sweenoy may need to go back to the previous suppliers. But Betier Bakes' relationship wieh them may have been damoged and they may now be selling all their avallable titanium to other mamilacturen. B. Lower quality bicycles could affect Botier Bakes' reputation with the distr butors, the bike shops and customers, keading to higher warranty claims and custamer dissetisfaction, and decreased sales in the future. c. There are no future problems trom buying a lower qualty of titaniurn. Better Bkes has a good roputhet and bike shops and cuatiomera wili still purchase the bikes. As a tesunt Sweenoy has increased profits. D. Bothia and B