Better bikes established the following standards based upon

Reference no: EM13600581

Material cost variances, use of variances for performance evaluation. Katharine Stanley is the owner of Better Bikes, a company that produces high quality cross-country bicycles. Better Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle shops. For several years Better Bikes has purchased titanium from suppliers in the supply chain. Better 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, Better Bikes hired Michael Scott, 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.

Better Bikes established the following standards based upon the company's experience with previous suppliers. The standards are as follows:

Cost of titanium --------------- $22 per pound
Titanium used per bicycle ----------------------- 8 lb.
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 ------------- 7,900 lb.

Required
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?

Reference no: EM13600581

Questions Cloud

You own an automobile parts company and have been : you own an automobile parts company and have been approached by a leading car manufacturer to supply parts to the

You have started a business that has now been going for a : you have started a business that has now been going for a couple of years. due to the increased volume in sales you

You own an automobile parts company and have been : you own an automobile parts company and have been approached by a leading car manufacturer to supply parts to the

Describe the management style you would bring to the job so : 1. research has shown that first time managers are prone to make similar mistakes in their new position.2. describe the

Better bikes established the following standards based upon : material cost variances use of variances for performance evaluation. katharine stanley is the owner of better bikes a

Imagine managerial accounting did not exist suggest what : bullimagine managerial accounting did not exist. suggest what would or would not occur and describe the implications

Analyze the differences between liquidity profitability and : financial ratios hold a different importance level for different people. pick two people from the list below and then

Identify at least two errors that can occur when : what is cash flow in accounting? bullwhen considering an investment opportunity one prominent investor believes the

Lauter printing uses two measures of activity press runs : lauter printing uses two measures of activity press runs and book set-ups in the cost formulas in its budgets and

User Account

All Pages