Exercise $10-16($Algo$)$ Overhead Performance Report with Both Spending and Efficiency Variances $[$LO$4,$ LO$7]$

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$1,310$Actual labour$-$hours$1,290$Standard labour$-$hours allowed for the actual number of cheques processed$1,330$

$$Cost Formula

$($per labour$-$hour$)$Actual Costs

Incurred in

OctoberVariable overhead costs:$$Office supplies$$0\mathrm{.}40$$$480$Staff coffee lounge$0\mathrm{.}10189$Indirect labour$2\mathrm{.}003,780$Total variable overhead cost$$2\mathrm{.}50$$$4,449$

Fixed overhead at Pay Loans Company consists entirely of supervisory salaries and is applied at a rate of $$4$ per direct labour$-$hour. Actual fixed overhead costs totalled $$4,200$ in October, while the flexible budget was $$4,000$ 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.

Note: Input all amounts as positive values. Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).$

$*$Please explain your process as I prepare for my final exam and I am not the best with math.