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.

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

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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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.