Assume you are a cost accountant at Amazon, responsible for analyzing the manufacturing overhead variance. The budgeted manufacturing overhead for the period was $2,500,000, while the actual overhead incurred amounted to $2,700,000. Determine:

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  • The total overhead variance.
  • Break down the variance into spending and efficiency variances.
  • Interpret the variances in terms of their impact on Amazon's manufacturing operations. Present your calculations in a paragraph format and use bullet points to explain the factors contributing to the variances.