Roxy Labs Inc produces varlous chemical compounds for Industrial use. One compound, called Clix, Is prepared by means of an elaborate distllling process. The company has developed standard costs for one unit of Clix, as follows:

$\backslash$table$[[$Direct mater$1$als,$2\mathrm{.}60,$mL at$,$$$18,$per mll$1111$tre$],[$Direct labour,$1\mathrm{.}20,$hours at$,$$$17\mathrm{.}00,$per hour$],[$Var$1$able overhead,$1\mathrm{.}20,$hours at$,$$$9\mathrm{.}00,$per hour$]]$

During November, the following activity was recorded by the company relative to production of Clix:

a$.$ Materlals were purchased. $11,600$ millliltres at a cost of $$234,900.$

b$.$ There was no beginning Inventory of materials on hand to start the month; at the end of the month, $2400$ milllilitres of material remalned in the warehouse unused.

c$.$ The company employs $35$ lab techniclans to work on the production of Clix. During November, each worked an average of $160$ hours at an average rate of $$13$ per hour.

d$.$ Varlable manufacturing overhead is assigned to Clix on the basis of direct labour$-$hours. Varlable manufacturing overhead costs during November totalled $$18,200.$

e$.$ Fixed overhead is also allocated on the basis of direct labour$-$hours. The company had budgeted $$14,436$ for the month but underapplled it by $$693.$

f$.$ During November, $3,760$ good units of Clix were produced. The normal volume for the month is $4,010$ good units.

The company's management is anxious to determine the efficlency of the activitles sur$$unding the production of Clix. The company's policy is to Invesugate any varlance more than $2\%$ different from the relevant standard.

Required:

For materlals used in the production of Clix:

a$.$ Compute the price and quantity varlances. $($Indicate the effect of each varlance by selecting $"$F$"$ for favourable. $"$U$"$ for unfavourable, and "None" for no effect $($l$.$e$.$ zero varlance$).)$

$\backslash$table$[[,],[$Materials price variance,$],[$Materials quantity variance,$]]$

b$.$ The materlals were purchased from a new supplier who is anxlous to enter into a long$-$term purchase contract. Would you recommend that the company sign the contract?

$$ Yes

$$ No

$2$ For direct labour employed in the production of Clix.

a$.$ Compute the rate and efficlency varlances. $($Indicate the effect of each varlance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($l$.$e$.$ zero varlance$))$

$\backslash$table$[[],[$Labour rate variance,$],[$Labour efficiency variance,$]]$