Montgomery Company has developed the following flexible budget formulas for its four overhead items:     Variable rate per Overhead item Fixed cost direct labor hour Maintenance $10,000 $  3.00 Power $  1,500 $  0.30 Indirect labor cost   $12.00 Equipment lease $  7,000   Total $18,500 $15.30 Montgomery normally produces 15,000 units (each unit requires 0.30 direct labor hours); however, this year, 19,000 units were produced with the following actual costs: Overhead item Actual costs Maintenance $14,000 Power $  2,200 Indirect labor cost $70,000 Equipment lease $  7,000 Total costs $93,200 Using an after-the-fact flexible budget, calculate the variance for power. a.$1,010 U b.$3,000 U c.$1,000 F d.$1,010 F e.None of these choices are correct.

Montgomery Company has developed the following flexible budget formulas for its four overhead items:

    Variable rate per
Overhead item Fixed cost direct labor hour
Maintenance $10,000 $  3.00
Power $  1,500 $  0.30
Indirect labor cost   $12.00
Equipment lease $  7,000  
Total $18,500 $15.30

Montgomery normally produces 15,000 units (each unit requires 0.30 direct labor hours); however, this year, 19,000 units were produced with the following actual costs:

Overhead item Actual costs
Maintenance $14,000
Power $  2,200
Indirect labor cost $70,000
Equipment lease $  7,000
Total costs $93,200

Using an after-the-fact flexible budget, calculate the variance for power.

a.$1,010 U
b.$3,000 U
c.$1,000 F
d.$1,010 F
e.None of these choices are correct.
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