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The cheque-clearing office of Pay Loans Company is responsible for processing all cheques that come to the company for payment. Managers at the company believe
The cheque-clearing office of Pay Loans Company is responsible for processing all cheques that come to the company for payment. Managers at the company believe that variable overhead costs are essentially proportional to the number of labour-hours worked in he office, so labour-hours are used as the activity base when preparing variable overhead budgets and performance reports. Data for ctober, the most recent month, appear below: ixed overhead at Pay Loans Company consists entirely of supervisory salaries and is applied at a rate of $6 per direct labour-hour. Actual fixed overhead costs totalled $6,200 in October, while the flexible budget was $6,000 for the month. Pequired: Prepare an overhead performance report for October for the cheque-clearing office that includes both spending and efficiency ariances for variable overhead and the budget variance for fixed overhead. (Indicate the effect of each variance by selecting "F" for avourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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