. P10.2 (L0 1,3,4), AN The company where Alan works produces skateboards locally but sells them globally for $60 each. Alan is one of the production managers in a meeting to discuss preliminary results from the year just ended. Here is the information they had in front of them: Standards Quantity per Unit Price Wood 2.50 feet $4.00 per foot Wheels 4.00 wheels $0.50 per wheel Direct labor 0.30 hours $15.00 per hour Actual results: Quantity of wood purchased, 200,000 feet; quantity of wood used, 195,000 feet. Quantity of wheels purchased, 310,000 wheels; quantity of wheels used, 290,000 wheels. Actual cost of the wood, $4.20 per foot. Actual cost of the wheels, $0.55 per wheel. Quantity of DL hours used, 23,500 hours; actual cost of DL hours, $16.50 per hour. Actual units produced, 72,000 skateboards. Required a. Complete a variance analysis for DM (both wood and wheels) and DL, determining the price and effi- ciency variances for each; be sure to specify the amount and sign of each variance. b. Create a T-account for each DM Inventory account and for WIP Inventory, assuming all started with zero balances. Given your variance analysis in part (a), record any new debits and/or credits to these two T-accounts to reflect the DM and DL activity. Then, explain the ending balances for each DM Inventory accountwhat does each consist of in terms of DM quantity and price? c. Compare each variance to the flexible budget cost for that resource to determine its significance (for exam- ple, compare the DL price variance to the DL flexible budget cost). Explain the underlying cause of each variance, and provide at least one plausible reason for each variance. Look for any trends in both variance significance and sign for these three resources this past year. Is there one scenario that could explain most of these variances? . P10.2 (L0 1,3,4), AN The company where Alan works produces skateboards locally but sells them globally for $60 each. Alan is one of the production managers in a meeting to discuss preliminary results from the year just ended. Here is the information they had in front of them: Standards Quantity per Unit Price Wood 2.50 feet $4.00 per foot Wheels 4.00 wheels $0.50 per wheel Direct labor 0.30 hours $15.00 per hour Actual results: Quantity of wood purchased, 200,000 feet; quantity of wood used, 195,000 feet. Quantity of wheels purchased, 310,000 wheels; quantity of wheels used, 290,000 wheels. Actual cost of the wood, $4.20 per foot. Actual cost of the wheels, $0.55 per wheel. Quantity of DL hours used, 23,500 hours; actual cost of DL hours, $16.50 per hour. Actual units produced, 72,000 skateboards. Required a. Complete a variance analysis for DM (both wood and wheels) and DL, determining the price and effi- ciency variances for each; be sure to specify the amount and sign of each variance. b. Create a T-account for each DM Inventory account and for WIP Inventory, assuming all started with zero balances. Given your variance analysis in part (a), record any new debits and/or credits to these two T-accounts to reflect the DM and DL activity. Then, explain the ending balances for each DM Inventory accountwhat does each consist of in terms of DM quantity and price? c. Compare each variance to the flexible budget cost for that resource to determine its significance (for exam- ple, compare the DL price variance to the DL flexible budget cost). Explain the underlying cause of each variance, and provide at least one plausible reason for each variance. Look for any trends in both variance significance and sign for these three resources this past year. Is there one scenario that could explain most of these variances