Question

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000. If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials Question 12 options:

a. $1,400 unfavorable
b. $600 favorable
c. $600 unfavorable
d. $1,400 favorable

Answer 1

difference for indirect materials = $600 unfavorable

correct option is c. $600 unfavorable

Step-by-step explanation:

given data

direct labor hours = 18,000

indirect materials= $36,000

incurred = $37,400

direct labor hours = 18,400

to find out

difference for indirect materials

solution

we get here difference for indirect materials that is express as

difference for indirect materials =
`(indirect\ materials*direct\ labor\ hours)/(direct\ labor\ hours)` - incurred ......................1

difference for indirect materials =
`(36000*18400)/(18000)` - $37400

difference for indirect materials = $36800 - $37400

difference for indirect materials = $600 unfavorable

correct option is c. $600 unfavorable