Aaha Inc. produces premium protective automotive covers. The direct materials and direct labour standards for one car cover are as follows:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost
Direct materials		5.5	metres of cloth	$	11	per metre	$	60.50
Direct labour		0	hours	$	13	per hour	$	3
Variable overhead		0	hours	$	6	per hour	$	2

Budgeted fixed overhead cost is $16,000, and the normal production volume is 2,185 car covers. Overhead is applied on the basis of direct labour-hours.

In September, the following activity was recorded:

	11,000 metres of cloth were purchased at a cost of $10.50 per metre.
	All of the purchased material was used to produce 2,000 car covers.
	550 direct labour-hours were recorded at a total labour cost of $7,150.
Actual variable overhead cost was $4,900, and fixed overhead cost was $15,800.

Required:

1.	Compute all direct materials variances for September. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

2.	Compute all direct labour cost variances for September. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

3.	Calculate the total under- or overapplied overhead. Show all the variances calculated and indicate if each variance is favourable or unfavourable. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations and round "Fixed overhead volume variance and total variance" to 2 decimal places.)

4.

Suppose the standard price per metre for cloth increases by $1. The quantity variance is unaffected, but the price variance will become more favourable than before, all else equal. True or false?

	True
	False

5.

When the productivity in the use of direct materials improves, where will the impact be first measured? Select from the three choices below:

	In the actual cost of direct materials used.
	In the standard cost of direct materials used.
	In the cost of the direct materials reported on the flexible budget.