Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:
$\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.When using an after-the-fact flexible budget,what is the variance for power?
A)$1,000 U
B)$1,000 F
C)$1,600 U
D)$3,000 U

Question

Bridgestone Company has developed the following flexible budget formulas for its four overhead items:
Bridgestone normally produces 10,000 units (each unit requires 0.10 direct labour hours); however, this year 15,000 units were produced with the following actual costs:
  $\begin{array}{ll}\text { Overhead item }&\text { Actual costs }\
\text { Maintenance } & \$ 14,000 \
\text { Power } & \$ 3,600 \
\text { Direct labour } & \$ 16,000 \
\text { Equipment lease } & \$ 5,000
\end{array}$
-Refer to the Figure.When using an after-the-fact flexible budget,what is the variance for power?
A)$1,000 U 
B)$1,000 F 
C)$1,600 U 
D)$3,000 U

Quizplus · Accepted Answer

The variance for power is $1,000 unfavorable (U) because the actual cost exceeded the flexible budget cost by $1,000.

Bridgestone Company Has Developed the Following Flexible Budget Formulas for Its