1. Compute the direct materials price and efficiency variances. 2. What factors can explain the variances...

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 GroovyGroovy Bikes? Explain why or why not.
4.	Should Michael LaChutLaChut's performance evaluation be based solely on pricevariances? Should the production manager's evaluation be based solely on efficiency variances? Why is it important for Katharine StanleyStanley to understand the causes of a variance before she evaluates performance?
5.	Other than performance evaluation, what reasons are there for calculatingvariances?
6.	What future problems could result from GroovyGroovy Bikes' decision to buy a lower quality of titanium from the online marketplace?

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 LaChut, 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.

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

	Cost of titanium	$20	per pound
	Titanium used per bicycle	8	lbs.

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

Bicycles produced	800
Titanium purchased	8,400	lb. for $159,600
Titanium used in production	6,900	lb

Expert Solution

PLEASE UNDERSTAND THAT WE ARE REQUIRED TO ANSWER FOUR PARTS OF A QUESTION. AS SUCH, REQUEST YOU TO ASK REMAINING PARTS THROUGH A SEPARATE QUESTION.

ekkarill92 answered 1 year ago

Compute the cost and efficiency variances for direct materials and direct labor. 2. For manufacturing overhead,...

Compute the cost and efficiency variances for direct materials and direct labor. 2. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. 3. HeadsetHeadset's management used better quality materials during September. Discuss the trade-off between the two direct material variances. Standard Cost Information Quantity Cost Direct Materials 2 parts $0.15 per part Direct Labor 0.02 hours 9.00 per hour Variable Manufacturing Overhead 0.02 hours 11.00 per hour Fixed Manufacturing Overhead...

Required: 1. For direct materials: a. Compute the price and quantity variances. b. The materials were...

Required: 1. For direct materials: a. Compute the price and quantity variances. b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 2. For direct labor: a. Compute the rate and efficiency variances. b. In the past, the 20 technicians employed in the production of Fludex consisted of 7 senior technicians and 13 assistants. During November, the company experimented with fewer senior...

1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give...

1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. 2. Suppose 7,200 square yards of materials were purchased (at $5.10 per squareyard), even though only 4,900 square yards were used. Suppose further that variances are identified at their most timely control point; accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production...

Question 2: Input price and input efficiency variances The budgeted and actual data for direct materials...

Question 2: Input price and input efficiency variances The budgeted and actual data for direct materials and labor are as follows: Budgeted Actual DM price $1 per pound $0.75 per pound DM quantity per unit 5 pounds per unit 6 pounds per unit DL price $8 per hour $11 per hour DL quantity per unit 0.3 hours per unit 0.4 hours per unit Actual sales volume is 100 units. Budgeted sales volume is 80 units. a) Without computations, characterize the...

Compute the price, quantity, and flexible-budget variances for direct materials and direct labor. Use U or...

Compute the price, quantity, and flexible-budget variances for direct materials and direct labor. Use U or F to indicate whether the variances are unfavorable or favorable. 1. Begin by completing the variance analysis below for direct materials. Be sure to label each variance as favorable or unfavorable. (Enter all amounts as positive numbers. Round your answers to the nearest whole dollar.) 2. Prepare a plausible explanation for the performance. Direct Materials Direct Labor Actual price per unit of input (lb...

Input price and input efficiency variances The budgeted and actual data for direct materials and labor...

Input price and input efficiency variances The budgeted and actual data for direct materials and labor are as follows: Budgeted Actual DM price $3 per pound $2.75 per pound DM quantity per unit 3 pounds per unit 4 pounds per unit DL price $10 per hour $13 per hour DL quantity per unit 0.2 hours per unit 0.3 hours per unit Actual sales volume is 100 units. Budgeted sales volume is 80 units. Compute the input price and input efficiency...

Describe who is responsible for the cost and efficiency variances for direct materials, direct labor, and...

Describe who is responsible for the cost and efficiency variances for direct materials, direct labor, and manufacturing overhead?

Direct Materials and Direct Labor Variances

The following information is for the standard and actual costs for the Happy Corporation.Standard Costs:Budgeted units of production - 16,000 (80% of capacity)Standard labor hours per unit - 4Standard labor rate - $26 per hourStandard material per unit - 8 lbs.Standard material cost - $ 12 per poundStandard variable overhead rate - $15 per labor hourBudgeted fixed overhead - $640,000Fixed overhead rate is based on budgeted labor hours at 80% capacity.Actual Cost:Actual production - 16,500 unitsActual material purchased and used...

Compute materials and labour variances, and explain how they are used for control.

1) Direct Materials Variances The following data relate to the direct materials cost for the production...

1) Direct Materials Variances The following data relate to the direct materials cost for the production of 2,300 automobile tires: Actual: 61,300 lbs. at $1.85 per lb. Standard: 63,100 lbs. at $1.8 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance $ Unfavorable Direct Materials Quantity...

Question