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

Direct materials $2\mathrm{.}40$ mL at $ $18$ per millilitre

Direct labour $1\mathrm{.}30$ hours at $ $15\mathrm{.}00$ per hour

Variable overhead $1\mathrm{.}30$ hours at $ $3\mathrm{.}00$ per hour

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

Materials were purchased, $12,400$ millilitres at a cost of $$241,800.$

There was no beginning inventory of materials on hand to start the month; at the end of the month, $2,400$ millilitres of material remained in the warehouse unused.

The company employs $35$ lab technicians to work on the production of Clix. During November, each worked an average of $160$ hours at an average rate of $$14$ per hour.

Variable manufacturing overhead is assigned to Clix on the basis of direct labour$-$hours. Variable manufacturing overhead costs during November totalled $$18,400.$

Fixed overhead is also allocated on the basis of direct labour$-$hours. The company had budgeted $$5,213$ for the month but underapplied it by $$250.$

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

The company$$s management is anxious to determine the efficiency of the activities surrounding the production of Clix. The company$$s policy is to investigate any variance more than $2\%$ different from the relevant standard.

Required:

$1.$ For materials used in the production of Clix:

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

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

multiple choice $1$

Yes

No

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

a$.$ Compute the rate and efficiency variances. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

b$.$ In the past, the $35$ technicians employed in the production of Clix consisted of $20$ senior technicians and $15$ assistants. During November, the company experimented with only $15$ senior technicians and $20$ assistants in order to save costs. Would you recommend that the new labour mix be continued?

multiple choice $2$

Yes

No

$3-$a$.$ Compute the variable overhead spending and efficiency variances. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$4.$ Compute the fixed overhead cost variances for November. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$