Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Data for the past year follow.

	Budget	Actual
Labor hours	210,000	210,000
Machine hours	370,000	460,000
Number of setups	3,000	3,300
Unit variable cost pool	$ 1,665,000	$ 2,070,000
Batch-level cost pool	$ 840,000	$ 924,000

Assume that both cost pools for Institute are combined into a single pool, and labor hours are the driver. What are the total flexible budget for the actual level of labor hours and the total variance for the combined pool?

a. A flexible budget of $1,665,000 and an unfavorable variance of $405,000.

b. A flexible budget of $2,505,000 and an unfavorable variance of $489,000.

c. A flexible budget of $2,589,000 and an unfavorable variance of $405,000.

d. A flexible budget of $2,910,000 and an unfavorable variance of $84,000.

e. A flexible budget of $2,994,000 and a variance of $0.