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 1,378 Actual labour-hours 1,305 Standard labour-hours allowed for the actual number of cheques processed 1,390 Variable overhead costs: Office supplies Staff coffee lounge Indirect labour Total variable overhead cost Cost Formula Actual (per Costs labour Incurred in hour) October $ 1.00 0.20 2.60 $1,274 331 $ 3.80 2,149 $3,754 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 $7,300 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- 1,305 Labour- hour) Hours Flexible Budget Based on 1,305 Labour-Hours Flexible Budget Based on 1,390 Total Variance Labour-Hours Variable overhead costs: Office supplies $ 1.00 $ 1,274 Staff coffee lounge 0.20 3311 Indirect labour 2.60 2,149 Total variable overhead cost $ 3.80 $ 3,754 Fixed overhead costs: Supervisory salaries 7,300 Total overhead cost $ 11,054 Breakdown of the Total Variance Spending (Budget) Variance Efficiency Variance