Division C makes a part that it sells to customers outside of the company. Data concerning this part appear below:

Selling price to outside customers	$ 42
Variable cost per unit	$ 32
Total fixed costs	$ 429,000
Capacity in units	27,600

Division D of the same company would like to use the part manufactured by Division C in one of its products. Division D currently purchases a similar part made by an outside company for $41 per unit and would substitute the part made by Division C. Division D requires 5,630 units of the part each period. Division C has ample excess capacity to handle all of Division Ds needs without any increase in fixed costs and without cutting into outside sales. What is the lowest acceptable transfer price from the standpoint of the selling division?

The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	7.0	millilitres	$	0.28	per millilitre	$	1.96
Direct labour	0.4	hours	$	12.00	per hour	$	4.80

During the most recent month, the following activity was recorded:

1. 21,500 millilitres of material was purchased at a cost of $0.23 per millilitre.
2. All of the material was used to produce 3,000 bottles of Clean-All.
3. 700 hours of direct labour time was recorded at a total labour cost of $8,400.

Required:

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

Material Price variance		F or U or None
Materials Quantity Variance		F or U or None