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-hours1,330Actual labour-hours1,285Standard labour-hours allowed for the actual

number of cheques processed1,350

Cost Formula

(per labour-hour)Actual Costs

Incurred in

OctoberVariable overhead costs:Office supplies$0.60$780Staff coffee lounge0.20317Indirect labour2.203,527Total variable overhead cost$3.00$4,624

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 $7,350 in October, while the flexible budget was $7,000 for the month.

Required: 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).)

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 ofce, 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 1,330 Actual labour-hours 1,285 Standard labour-hours allowed for the actual number of cheques processed 1,350 Cost Formula Actual Costs (per Iabour- Incurred in hour) October Variable overhead costs: Ofce supplies $0.60 $ 780 Staff coffee lounge 0.20 317 Indirect labour 2.20 3,527 Total variable $300 $4,624 overhead cost Fixed overhead at Pay Loans Company consists entirely of supervisory salaries and is applied at a rate of $7 per direct labour-hour. Actual xed overhead costs totalled $7,350 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 Breakdown of the Total Variance Cost Actual Costs Flexible Flexible Incurred for Budget Based Spending Overhead costs Formula Budget Based Efficiency (per labour- 1,285 Labour- on 1,285 on 1,350 Total Variance (Budget) Variance hour) Hours Labour-Hours Labour-Hours Variance Variable overhead costs: Office supplies $ 0.60 $ 780 Staff coffee lounge 0.20 317 Indirect labour 2.20 3,527 Total variable overhead cost $ 3.00 $ 4,624 Fixed overhead costs: Supervisory salaries 7,350 Total overhead cost 11,974