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 inthe office, so labour-hours are used as the activity base when preparing variable overhead budgets and performance reports. Data forOctober, the most recent month, appear below:Budgeted labour-hours1,500Actual labour-hours.1,460Standard labour-hours allowed for the actual number of cheques processed1,520Variable overhead costs:Office suppliesStaff coffee loungeIndirect labourTotal variable overhead costCostFormulaActual(perCostslabourIncurred inhour)October$ 0.908.503.90$1,2777104,325$ 5.30$ 6,312Fixed overhead at Pay Loans Company consists entirely of supervisory salaries and is applied at a rate of $6 per direct labour-hour.Actual fixed overhead costs totalled $6,400 in October, while the flexible budget was $6,000 for the month.Required:Prepare an overhead performance report for October for the cheque-clearing office that Includes both spending and efficiencyvariances for variable overhead and the budget varlance for fixed overhead. (Indicate the effect of each varlance by selecting "F" forfavourable, "U" for unfavourable, and "None" for no effect (l.e., zero variance).)Overhead costsCost Actual CostsFormula Incurred for(per labour- 1,460 Labour-hour)HoursVariable overhead costs:Office supplies$0.90 S1.277Staff coffee lounge0.50710Indirect labour3.904,325Total variable overhead cost.$5.30 S6,312Fixed overhead costs:Supervisory salariesTotal overhead cost6.400$12,712PAY LOANS COMPANYOverhead Performance ReportFor the Month Ended October 31FlexibleBudget Basedon 1,460Labour-HoursFlexibleBudget Basedon 1,520Labour-HoursTotal VarianceFNoneUBreakdown of the Total VarianceSpending (Budget)VarianceEfficiency Variance

Name: The cheque-clearing office of Pay Loans Company is responsible for pr
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Description: 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 wo

The flexible budget is a budget that records the actual costs, flexible budget, and planning budget…

Business

Accounting

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 varlance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (l.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- 1,460 Labour- hour) Hours Flexible Budget Based on 1,460 Labour-Hours Variable overhead costs: Office supplies $ 0.90 $ 1.277 Staff coffee lounge 0.50 710 Indirect labour 3.90 4.325 Total variable overhead cost $ 5.30 $ 6.312 Fixed overhead costs: Supervisory salaries Total overhead cost 6,400 $ 12,712 Flexible Budget Based on 1,520 Labour-Hours Breakdown of the Total Variance Spending (Budget) Total Variance Variance Efficiency Variance F None U

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 varlance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (l.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- 1,460 Labour- hour) Hours Flexible Budget Based on 1,460 Labour-Hours Variable overhead costs: Office supplies $ 0.90 $ 1.277 Staff coffee lounge 0.50 710 Indirect labour 3.90 4.325 Total variable overhead cost $ 5.30 $ 6.312 Fixed overhead costs: Supervisory salaries Total overhead cost 6,400 $ 12,712 Flexible Budget Based on 1,520 Labour-Hours Breakdown of the Total Variance Spending (Budget) Total Variance Variance Efficiency Variance F None U

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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