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 the office, so labour-hours are used as the activity base when preparing variable overhead budgets and performance reports. Data for October, the most recent month, appear below: Budgeted labour-hours Actual labour-hours 1,450 1,345 Standard labour-hours allowed for the actual number of cheques processed 1,470 Variable overhead costs: Office supplies Indirect labour Staff coffee lounge Total variable overhead cost Cost Formula (per labour- hour) Actual Costs Incurred in October $ 490 $ 0.40 0.40 3.40 $ 4.20 598 3,789 $4,877 Fixed overhead at Pay Loans Company consists entirely of supervisory salaries and is applied at a rate of $7 per direct labour-hour. Actual fixed overhead costs totalled $7,200 in October, while the flexible budget was $7,000 for the month. Required. Prepare an overhead performance report for October for the cheque-clearing office that includes both spending and efficiency variances for variable overhead and the budget variance for fixed overhead. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) PAY LOANS COMPANY Overhead Performance Report For the Month Ended October 31 Overhead costs Cost Actual Costs Formula Incurred for (per labour- 1,345 Labour- hour) Hours Flexible Budget Based on 1,345 Labour-Hours Variable overhead costs: Office supplies $ 0.40 $ 490 Staff coffee lounge 0.40 598 Indirect labour 3.40 3,789 Total variable overhead cost $ 4.20 $ 4,877 Fixed overhead costs: Supervisory salaries 7,200 Flexible Budget Based on 1,470 Labour-Hours Total Variance Breakdown of the Total Variance Spending (Budget) Variance Efficiency Variance