Katharine Stenback is the owner of Groovy âBikes, a company that produces high qualityâ cross-country bicycles. Groovy Bikes participates in a supply chain that consists ofâ suppliers, manufacturers,â 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 Kerwin, 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. Cost of titanium $19 per pound
Titanium used per bicycle 8lbs
Actual results for the first month using the online supplier of titanium are as follows:
Bicycles produced 700
Titanium purchased 8,100 lbs. for $145,000
Titanium used in production 7,100 lbs

Required:
a. Compute the direct materials price and efficiency variances.
b. What factors can explain fie variances identified in requirement 1? Could any Other variances be affected?
c. Was switching suppliers a good idea for Groovy Bikes? Explain why or why not.
d. Should Michael Kerwin's performance evaluation be based solely price variances? Should the production manager' evaluation be based solely on efficiency variances? Why is it important (or Katharine Stenback to understand the causes of a variance before she evaluates performance?
e. Other than performance evaluation, what reasons are there for calculating variances?
f. What future problems could result from Groovy Bikes' decision to buy a lower quality of titanium from the online marketplace?