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3 July, 01:56

At 13000 direct labor hours, the flexible budget for indirect materials is $26000. If $28400 are incurred at 13400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

$2400 favorable.

$2400 unfavorable.

$1600 favorable.

$1600 unfavorable.

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  1. 3 July, 02:38
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    Variance will be $1600 (unfavorable)

    So option (d) will be the correct option

    Explanation:

    We have given indirect labor hours = 13000

    And the flexible budget for indirect material = $26000

    So indirect material cost [tex]=/frac{flexible / budget / for / indirect / material}{indirect / labor / hour}=/frac{$26000}{13000}=2 / per / direct / labor / hour[/tex

    Budgeted Cost = 13400*2 = 26800

    Actual Cost is given = $28400

    So variance = $28400-$26800 = $1600 (unfavorable)

    So option (d) will be the correct option
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