Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 labor hours worked in the office, so labor hours is used as the activity base when preparing variable overhead budgets and performance reports. Data for October, the most recent month, appear below:image text in transcribed

image text in transcribed

1,450 1,345 Budgeted labour-hours Actual labour-hours Standard labour-hours allowed for the actual number of cheques processed 1,470 Cost Actual Formula Costs (per Incurred labour- in hour) October Variable overhead costs: Office supplies Staff coffee lounge Indirect labour Total variable overhead cost $0.40 0.40 3.40 $ 4.20 $ 490 598 3,789 $4,877 Fix overhead at Pay Loans Company cor ists entirely of supervisory salaries and is applied at a rate of 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 Breakdown of the Total Variance Overhead costs Cost Actual Costs Formula Incurred for (per labour- 1,345 Labour- hour) Hours Flexible Flexible Budget Based Budget Based on 1,345 on 1,470 Labour-Hours Labour-Hours Total Variance Spending (Budget) Variance Efficiency Variance Variable overhead costs: $ 0.40 490 Office supplies Staff coffee lounge 0.40 598 Indirect labour 3.40 3,789 4,877 Total variable overhead cost $ 4.20 $ Fixed overhead costs: Supervisory salaries 7,200 12,077 Total overhead cost $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ronald W Hilton

7th Edition

0073022853, 978-0073022857

More Books

Students also viewed these Accounting questions

Question

What is the message frequency?

Answered: 1 week ago

Question

What is the schedule for this project?

Answered: 1 week ago

Question

Who is responsible for this project?

Answered: 1 week ago