The check-clearing office of San Juan Bank is responsible for processing all checks that come to the bank for payment. Managers at the bank believe that variable overhead costs are essentially proportional to the number of labor-hours worked in the office, so labor-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 labor-hours . . . . . . . . . . . . . . . . . . . . 865
Actual labor-hours . . . . . . . . . . . . . . . . . . . . . . . 860
Standard labor-hours allowed for the
actual number of checks processed . . . . . . . 880

Required:
Prepare a variable overhead performance report for October for the check-clearing office that includes both spending and efficiency variances. Use Exhibit 11€“7 as aguide.

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Cost Formula (per labor-hour) Actual Costs Incurred in October Variable overhead costs: Office supplies Staff coffee lounge.. .. Indirect labor $0.15 0.05 3.25 $3.45 146 124 2,790 $3,060